While additional weakness may still be in the cards, the S&P 500’s positive trend has not been damaged by today’s sell-off. The levels on the left labeled N1 and N2 represent previous neckline resistance that may now act as support. Lines B, C, and D are based on the slope of line A.
As long as the market remains above trendline C, near 1,320, we will most likely exercise some patience with our current positions. A clear break of line C may warrant some defensive action, which could take the form of a hedge. It is unlikely global policymakers will remain silent in the event of significant further weakness in risk assets, meaning a “risk-on” type of announcement could come at any time.