Frazzled Chart Watchers Pin Hopes for a S&P 500 Bounce at 2,800

(Bloomberg) -- At this point they’ll take anything if it slows the drop. But analysts looking for support levels in the S&P 500 Index are casting a particularly hopeful eye on 2,800 as a brake in the biggest rout of the year.

It’s an irony lost on no one, that a level that for three months offered fierce resistance on the way up, might also serve as a floor in a sell-off. Three different advances stalled there in the fourth quarter and the number is not far off from the five-year average price-earnings ratio of 16.6 using analyst operating income estimates for 2019.

Frazzled Chart Watchers Pin Hopes for a S&P 500 Bounce at 2,800

“Big round numbers have big psychological effect, if nothing else, around 2,800,” Rich Ross, head of technical analysis at Evercore ISI, said by phone. “There’s a good chance that we can hang on to 2,800. Cross-asset backdrop across currencies, commodities, interest rates and credit is still fairly tame. But lets say people bought a breakout above 2,800 and now you’re getting to the point where you’re getting underwater. That can create some selling pressure as well on a market that’s already experienced some selling pressure.”

The S&P 500 slid 2.3 percent to 2,814.48 at 2:10 p.m. in New York. The index fell as low as 2,801.43 earlier in the session.

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