FxWirePro: S&P 500 likely to decline 2 percent to 2500 support area

The selloff in the global stock market has entered into its second week, and for the first time this year, bears are showing some considerable strength, though not enough to reverse the course of the global bull market which is just months away from completing its eight-year run.

Japanese benchmark stock index JPN225 (CFD version of Nikkei 225) has declined sharply after reached 23400 area, which was the highest level for the index in 26 years. Nikkei has declined more than 1500 points and is currently trading at 21870 area. Similar picture in Europe, where German benchmark stock index DAX has declined more than 600 points or more than 4.5 percent. Similarly, European blue-chip index Eurostoxx50 has declined almost 5 percent from its peak two weeks ago.

Compared to the above, the American indices have shown remarkable resilience. U.S. benchmark S&P 500 has declined just above 30 points from its peak or around 1.2 percent. We expect the benchmark to further decline by another 2 percent and test support in the region of 2500-2520. However, the index will continue to remain resilient compared to other global benchmarks.