The stock markets were hit during the trading session on Wednesday, as we continue to worry about whether or not there is going to be a vaccine for the coronavirus situation, but quite frankly there has been a lot of cracks under the ice for some time. Looking at the chart, the 3000 level underneath is a massive round number that a lot of people pay attention to, not only due to the fact that it is a round number but also the fact that the 50 day EMA is sitting just below there so I think we will see technical traders as well.
We have bounced a little bit from the lows, so that is a good sign, but I think what we are going to see is a simple return to either consolidation or an attempt to break down below here. This being the case, I think we need another catalyst to break down so I think this pullback has been more or less an attempt to sell off in a short-term panic, and we will find some type of resiliency. Underneath the 50 day EMA we have at 2967 handle the 200 day EMA, so that is something that is worth paying attention to.
If we were to break down below the 200 day EMA then I think we will go looking towards the 2800 level, but I do not necessarily think that is going to happen on Thursday. It might, and it certainly is within the realm of possibility, but we would need another catalyst I think to make that happen. I believe that the markets will continue to be very choppy and volatile, but that is going to be the way they behave for the rest of the year. Because of this, you need to keep your position size small and perhaps trade micro contracts if you are in the futures market. Otherwise, keep your CFD positions relatively small as we will clearly see a lot of noise. I think the market has a long way to go before we get clarity. To the upside, the 3150 level is massive resistance that being broken could open up the doors to the 3200 level. That is a massive barrier as well, so that could be a longer-term target, but I do not see it being broken through this week.