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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Losses can exceed deposits on some products.
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'Santa rally' hopes shatter on S&P 500 selloff

Equities 3 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  Bulls' hopes for a year-end rally in the S&P 500 were already on shaky ground following continued trade war noise surrounding the Huawei CFO arrest, but Friday's sell-off has likely put them to rest.

Bulls dreaming of a "Santa Claus rally" in the benchmark S&P 500 inxed saw their hopes shattered Friday with another sell-off taking the index down to crucial support at around 2,632. Support at this level is clear on an intraday chart like the one-hour chart below; the S&P 500 has dipped a few points below a few times but it has always jumped back.

Within the last hour of trading Friday, the S&P 500 managed to scramble just above this point to close at 2,633. A daily close below this area, however, could fuel a new sell-off and bulls will most likely have to forget about Santa coming around this year.

Renewed selling would most likely take the Index down to around 2,550. If – and it's a big 'if' – Santa changes his mind and comes around, do not expect many presents. Any rally at this point would likely not exceed a bounce back to 2,800 at best, where there seems to be strong resistance.

The Relative Strength Index is bearish, having been rejected at the 60 threshold; it has also broken its rising trendline.
S&P 500 hourly
S&P 500 (hourly, source: Saxo Bank)
S&P 500 (daily)
S&P 500 (daily, source: Saxo Bank)

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.

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