A trader works on the floor at the New York Stock Exchange in New York City, New York, U.S., March 3, 2020.As investors continue to grapple with a rise in COVID-19 cases and the uncertainty of more fiscal stimulus from Congress, the technical picture of the stock market"has deteriorated," Morgan Stanley said in a note on Monday.the next level of support investors should watch is the 200-day moving average, according to the note.
A continued market sell-off to the 200-day moving average would represent downside potential of 5% and 12% in the S&P 500 and Nasdaq 100, respectively, based off of Monday's closing prices.Visit Business Insider's homepage for more storiesThe stock market's current correction may have more room to go from a technical perspective as investors turn their attention to rising COVID-19 daily cases and uncertainty from Congress on another fiscal stimulus package.
That's according to Morgan Stanley's Mike Wilson, who highlighted in a note on Monday that the"technical picture has deteriorated, especially for the Nasdaq 100," according to the note.after enjoying a steady, albeit overextended, uptrend. Now, the market's next level of key support is the 200-day moving average, which represents downside potential of 5% and 12% for the S&P 500 and Nasdaq 100 indices, respectively, based on Monday's closing prices.
While Morgan Stanley still sticks by its view that stocks are in the early days of a new bull market, the tech-heavy index remains especially vulnerable to continue its correction to the 200-day moving average.