The S&P 500 has retraced somewhat but where will the bears be looking for shorts?

• The S&P 500 has pushed up around 2.2% since hitting the lows of the session on Monday.
• The price even broke through the psychological 3000 level but there is some traffic nearby.

S&P 500 1-hour chart

The usual suspects are underperforming in the S&P 500 on Monday with Carnival (-6.00%) and American Airlines (-4.84%) struggling once again. The chart, however, has thrown up some interesting technical signs. 

There has been a bullish divergence on the Relative Strength Index (marked in red). This is then the market makes a lower low but the indicators makes a higher low wave. It might not always signal a trend reversal but it does mean the downside momentum might be falling and the market is taking a break. 

Very soon the price will be testing the 55 Exponential Moving Average and it would be interesting to see if there is some resistance the. That level is quite close to the 38.2% Fibonacci resistance zone which would add some weight to the importance of the zone. 

Elliot Wave analysts might be looking for the price to move as high as the 76.4 - 61.8% retracement zones and this could mean there is a wave 1-2 in the making. There is obviously a long way to go for this to have but the recent volatility in the market could warrant a move of that magnitude. 

The news of a potential second wave of COVID-19 infections in China could be a catalyst for another move down. Only time will tell but I am sure analysts will be looking for more data on the situation. 

Additional levels