The stock market is on the verge of reversal this week after the hefty gains from the past few weeks. Analysts are expecting the ..outcome of this reversal to be in the favor of more selling.
The data suggests that several indicators are in favor of a selloff this week. These include: a large amount of support on the October low, low volatility, as well as a weak performance on the momentum indicator.
The October low suggests that the market is still not yet confident in recovering the highs set in August and September. The low volatility is an indication that investors have taken a wait-and-see stance when it comes to opening and closing their positions. Lastly, the weak performance of the momentum indicator suggests that the recent gains are running out of steam.
A combination of these factors paints a grim picture over the short-term outlook of the stock market. In addition, news of rising coronavirus cases in the United States could lead to further selling in the near future.
Investors should take these factors into consideration when making investment decisions. Taking into account that the market could be subject to further correction and selloff is important to prevent any potential losses.
At the same time, traders should look out for any signs of potential buying opportunities in the near term. Technical traders should pay attention to the level of support and resistance levels. Meanwhile, fundamental traders should focus on news headlines that could affect the market outlook.
Overall, the odds indicate that we could see further selling in the near term. As such, investors should be aware of the potential risks of investing in this market and take precautions where necessary.