It looked ugly this morning around 5am Sydney time when the Dow was briefly trading down 425 points and the S&P hit 1,821.
It was pure panic, the very type of price action you need for a bottom – a pessimistic crescendo.
Indeed, the market, for whatever reason – it depends who you ask, rallied strongly with the S&P 500 rallying 40 points from the intra-day low to close at 1,862.
Here is a chart which suggests traders were eyeing the trendline from the 2011 low when markets were in a panic about a European banking crisis.
It is a big level and while this is a futures chart, if it was to break, the market could really accelerate to the downside. But as technical traders always say, “respect the line unless or until it breaks.”
It seems last night US traders certainly did. That’s great news for the ASX.