Stock Market Outlook: Major Technical Breakdown Means More Downside Ahead

Those interested in learning more about support and other aspects of technical analysis may want to considered enrolling in one of the best technical analysis courses. The Last Price shown is the last trade price at the time the quote page was displayed, and will not update every 10 seconds (as the Last Price at the top of the Quote page does). The Trader’s Cheat Sheet is updated for the next market session upon receiving a settlement or end of day record for the current market session. If $QQQ is unable to hold above its 20-day EMA, then the Nasdaq 100 ETF could swiftly see a test of its December swing low.

  1. The chart has no way to know if a market is settled, so it only updates upon receiving a price for the next session.
  2. If average daily crossings surpassed 5,000 or if the single-day total of crossings exceeded 8,500, then the president would be required to close the border.
  3. Ideally, we’d love to see the price pull back slightly, then chop around while holding above its rising 20 and 50-day MAs.
  4. When SPX broke out to new all-time highs at the end of 2021 and the beginning of 2022, it left behind support at 4700 – the area of the old highs.
  5. Fertilizer company Mosaic (MOS) was up 7.49%, grocer Kroger (KR) was up 6.79%, and industrial company Alcoa (AA) was up 9.37% and led non-energy companies.
  6. It would take New Lows registering more than 100 issues for two consecutive days in order to generate a sell signal.

Thus, they remain on sell signals and will continue to do so until they roll over and begin to decline. Even when the market rallies, it seems that there is a good deal of put buying, which keeps these ratios moving higher. “This was a major resistance level over the last 2 years that has since broken and been proven so far as a new support level,” said Sifling. The rising 200-week moving average for the S&P 500 currently sits at 3,503, with the index currently trading at 3,781. Stockton expects the S&P 500 to trend towards its next support level of 3,505, which represents potential downside of about 8% from current levels. “Momentum gauges point lower, and short-term oversold conditions are not widespread,” Stockton said.

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Occidental Petroleum (OXY) was up 17.59%, PBF Energy Inc. (PBF) was up 16.62%, and Peabody Energy (BTU) was up 14.71% and led energy stocks. Fertilizer company Mosaic (MOS) was up 7.49%, grocer Kroger (KR) was up 6.79%, and industrial company Alcoa (AA) was up 9.37% and led non-energy companies. The Cboe Market Volatility Index (VIX) settled off its highs to end at 31.98 but stayed in a range, which reflects market uncertainty. In summary, as long as SPX continues to close above 4690, its chart remains bullish, and we would maintain a “core” long position along with that outlook. In any case, we will continue to take positions in line with confirmed signals from our indicators, whether bullish or bearish. Rising oil prices helped the energy sector to be one of two sectors in the green on Monday.

Grain manufacturer Archer-Daniels-Midland (ADM) rallied more than 1% on the news and is up more than 13% from its February low. Government officials are hoping that reduced sanctions on Iran and Venezuela will get more oil supplies to market and help alleviate some of the pricing pressures. If the S&P 500 reaches Stockton’s downside target of 4,200, that would represent a sell-off of 13% from its record high reached on January 4. My Barchart members have the option to export the data to an Excel spreadsheet or as a .csv file.

Head & Shoulders Pattern: S&P 500 Breaks Key Support Level

Standard Deviation, which is a measure of past volatility, provides a mathematical possibility of trading range based on the mean values over the course of 1-year. These are useful in providing statistically important support and resistance levels. The S&P 500 falling to 3,500 also makes sense because it currently represents the rising 200-week moving average, Suttmeier said, which proved to be solid support level during market sell-offs in 2011, early 2016, and December 2018. WTI crude oil futures spiked over the weekend—trading as high as $130 per barrel—as an increasing number of companies are choosing not to buy Russian oil. Before the opening bell, oil prices had retreated to $120, which was still 3.85% higher than the closing price on Friday. The higher oil prices are pushing equity index futures lower in premarket trading.

He noted 11 of the past 15 Fed tightening cycles either preceded or coincided with U.S. recessions. The S&P 500 is on the verge of a technical breakdown, but Fairlead Strategies’ founder Katie Stockton says don’t sell stocks just yet. On Monday, the company held its first every shareholder conference and laid out its plan for the future. However, the stock fell nearly 13% on the day after the company’s management chose to reject takeover offers last year in order to try to reform the company itself. Macellum Advisors and Engine Capital have been vocally skeptical of the company’s management’s ability to engineer a turnaround. Looking at individual stocks, Bed Bath & Beyond (BBBY) jumped more than 35% on Monday because of the news that GameStop (GME) chairman and Chewy (CHWY) co-founder Ryan Cohen’s company, RC Ventures, took a 10% stake in the company.

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In this article, we analyze the index ETF charts for a deeper look at the current support and resistance levels of $SPY (S&P 500 ETF) and $QQQ (Nasdaq 100 ETF). As a bonus, how much can i make with $100 in forex we also highlight the stealth relative strength of $MDY (S&P Midcap 400 ETF). New 52-week Lows on the NYSE have outnumbered New Highs for the past eight trading days.

However, a breakdown below the 200-day MA and prior swing low would be rather bearish. Such price action on the back of moderate relative strength could lead to sideways to lower price action in the coming week. This convergence of shorter-term support could enable the S&P 500 to make another run at resistance in the coming days. Note that $SPY also formed a “higher low” with a multi-week base of consolidation in December 2022. Finally, the construct of volatility derivatives remains bullish since the term structures of the VIX futures and of the CBOE Volatility Indices continue to slope upwards. Sifling also outlined some important resistance levels, albeit higher than the ones singled out by Aguilar.

And the political moment feels a long way from 14 months ago when President Volodymyr Zelensky of Ukraine stood before a joint session of Congress, wearing his signature drab green sweater, and basked in a minute-long standing ovation. The data calendar for Monday is empty, leaving markets to just simmer away in panic this morning. Along with Wednesday’s Fed outcome, May retail sales will mark the week’s data highlight. Asian markets got battered both by U.S. inflation and mass testing in a heavily populated district of Beijing suffering a serious COVID outbreak. A final word from the strategist — based on history, if a recession is beginning, some sectors are probably nearer to pricing it in than others.

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The legislation has been described as the most severe set of changes to border policy in decades. If passed, the bill would provide $20bn in funding to bolster and expand border security operations at a time when arrests for illegal crossings at the US-Mexican border have hit record highs. To be sure, analysts clarified that the S&P 500 still has a lot of room to fall before analysts start to worry that this year’s bull-market run will give way to fresh lows. Of particular concern for stocks are historical seasonal trends that analysts believe could keep the pressure on through the end of September. Meanwhile, the Nasdaq 100 NDX, the best-performing major U.S. equity index year to date, also fell for a second straight week, the first back-to-back weekly losses for the high-flying, tech-heavy gauge since December. The reasons for the spikes are that many private companies are refusing to buy Russian oil and the United States and European allies are considering bans on Russian commodities, according to U.S.

The S&P 500 futures are down about 0.86% as the benchmark index is testing the 4,300 support level once again. This level has been an important level over the last few weeks and even back into July of 2021. Momentum indicators like the 50-day and 200-day moving averages have been reliable signposts for market performance since the beginning of 2022. Last year, the S&P 500 reliably sold off shortly after touching, or breaking above its 200-day moving average. About 17% of S&P 500 stocks are currently trading above their 50-day moving average, which is a level that has been consistent with bottoms during market corrections in the past.

“This would dictate risk management via reduced [equity] exposure and top-down hedges,” Stockton said in a Tuesday note. The S&P 500 managed to find support around the 4,550 level during drawdowns in early- and mid-December. The projected trigger prices of the signals are listed from highest price at the top of the page to lowest price at the bottom.

However, for a McMillan Volatiltiy Band (MVB) buy signal to occur, SPX will have to trade at 4459 or higher. Barbara Kollmeyer is based in Madrid, where she leads MarketWatch’s pre-markets coverage of financial markets and writes the Need to Know column. For example, recession drawdowns in the early 1980s totaled 17% and 27%, and in 1990 that peak-to-trough move totaled 19.9%. “The 18.7% move down that’s already been seen in early 2022 is worse than one of the 1980s drawdowns and close to the 1990 drawdown.

That snapped a 96-day streak of closes above the 50-day, the index’s longest since a 102-session streak ended on Sept. 17, 2020. The S&P 500 rallied off of its lows on Tuesday, but it is facing key technical resistance levels. The S&P 500 could sell-off an additional 10% from Friday’s close if its breaks below a key support level that is fast approaching, according to Katie Stockton of Fairlead Strategies.

Rising inflation and falling economic forecasts has rekindled talk of stagflation. Stagflation is the economic phenomenon where a country sees rising inflation despite a slow economy. The United States experienced stagflation in the late 1970s, which resulted in the Fed hiking the overnight rate to 20% in the early 1980s. The downside pressure for stocks has been led by the technology sector amid a hawkish pivot from the Federal Reserve, with several interest rate hikes appearing likely this year.

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