The SPDR S&P 500 ETF Trust (NYSE:SPY) may have broken an important support level. There’s a chance it rallies back above it, but there will also be a signal that may indicate it will keep going lower.
Buyer’s remorse is common when markets are heading South. Investors buy stocks but then regret doing so after the price moves lower. Many of them decide to sell, but they don’t want to lose money.
As a result, they place their sell orders at the same price they paid for the shares. If there are enough of these sell orders, it will create resistance.
The $416 level has been support for the SPY. This means a lot of investors bought shares at it. If the price drops below $416, many of them will decide to sell.
If there are a large number of these sell orders, the level will convert from support into resistance. This would mean a new downtrend is probably forming.
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