Starting the week, the S&P500 continues the primary expectation and reaches the first target area for the current decline. On Sunday, the U.S. reported 32,186 new coronavirus cases, and several European countries have also seen a steady increase in COVID 19 cases over the past 24 hours spreading pessimism amongst investors. The World Health Organization predicts that daily coronavirus deaths in Europe will increase in October and November, raising concerns about a possible second lockdown in Europe. Meanwhile, several major banks have reportedly transferred large amounts of illegal funds over a period of almost two decades. HSBC, JPMorgan, Deutsche Bank, Standard Chartered, and Bank of New York Mellon are among the banks involved in the report.
The minimum target for the current decline remains within the range of 3200 points. Below 3049 points, the way is paved for significantly lower quotations in the range of 2800 points. Since we expect new all-time highs in the long term, we will use the current drop to open long positions and thus position ourselves for the next rally.
In conclusion, we expect the current drop to reach the area of 3200 points before a bounce can be expected. We give the alternative scenario a 38% probability. The primary expectation remains that the index will reach a lower level of 2800 points, which is confirmed below 3049 points. However, in both scenarios, we expect at least a corrective bounce from the yellow target box, which will push the market back up towards 3440 points.
Grab some coffee, be awesome, and enjoy your trading day!
