A: A solid gain that easily turned into daily loss.
On Wednesday we suggested "the market" (traders, collectively) was unconsciously primed for more downside than has already been dished out. Leading us to that prospective conclusion was the fact that the market turned a sizeable win for the day into barely a breakeven after hearing news from the Federal Reserve that was anything but surprising. That is, there was no rate hike put in place for this month, but the first one of likely several interest rate increases will materialize in March. The point was/is, the market was going to start selling stocks again no matter what. It just needed a catalyst. Even a poor one would do, and a poor one did! In a bigger, philosophical sense, it was a sign that the sentiment undertow is still bearish.
That call was for a short while obliterated on Thursday, when the market marched firmly higher. By mid-day though, traders had collectively underscored our point that the prevailing mindset right now is bearish. It didn't even take any actual news to reverse today's rally. All it took was the threat of the S&P 500 moving above its 200-day moving average line (green) at 4431.3 to inspire the sellers to take another shot. The index lost another 0.66% its value on Thursday, logging its lowest close since October as a result. Take a look.
[1]
In (too) many ways, this is worse for the overall market than a loss that starts out as a loss right out of the gate. For a couple of hours stocks teased investors with a recovery. Then, just as their hopes were being raised the rug got pulled out from underneath them. The masses might have been willing to buy on a less volatile dip today. But, having their hopes dashed at the worst possible time is the sort of mental damage that's not easy to forget.
There's still a chance the market could recover from the current setback without slipping any further. As the weekly chart of the S&P 500 below better illustrates than the daily chart above does, there's a major technical floor still intact at 4280. The index is in a position to test that floor again, but again — so far anyway — that support is intact.
[2]
As we also discussed on Wednesday, there's room for the VIX to keep moving higher… one of the key requisites for more market downside. After Thursday's session though, the odds of the S&P 500's Volatility Index making that move just got better now that its former technical ceiling around 29 is now starting to act as a floor.
Just know that Friday may or may not be the day the market drops this next hint. It's trapped between support at 4280 and resistance at 4432. After such a raucous week, traders may be interested in forcing a move. They're more likely to pack it in before the weekend and postpone that decision until next week. Even then though, the pressure is on the bulls. The bears are still in control.