Bottom Line :
Momentum turned sharply from potentially bullish at the end of one week ago to unequivocally bearish beginning last Monday. The weakness was seen in all four US primary trading indices. We are at critical levels in the SPX (ES) and RUT (RTY). The DOW (YM) is “in the abyss” with any obvious support at least 4.5%+ lower. The NDX (NQ) showed relative strength against the others last week but below Friday’s low their is very little potential support for another 8%-9%.
It appears the US stock market is in a washout mode.
Closes by all four indices above last Thursday highs would negate the immediate bearish outlook.
Details below and in the video.
The area near 3800 contains a cluster of volume that we would normally expect to provide “support”. It may do just that. It is certainly going to be a critical area next week.
IF we are in washout mode it is likely that even if we get a temporary bounce of a day or two from near there the SPX is likley to trade more deeply toward the 3600 area prior to any significant time/price rally.
There is little potential support below Friday’s low.
The RUT declined almost 9% last week and closed Friday into a volume node. Below 1721 there is no market based potential support until 1668-1640.
There is no market based potential support for the DOW until the 30537-30198 area.
NYSE Breadth closed -2000 Thursday and Friday. Clusters of -2000 closing breadth readings in very short periods of time almost always occur near at least short-term lows.
Very short-term swing traders and intraday traders may want to be careful pressing the short side of the market if the indices continue to sell off into mid-week.
VIX spiked to its highest reading since mid-December, but is still below the 30 level that marked good lows during 2022. We may see that level, or higher, prior to any significant rally attempt.
US 10-yr. Notes
Notes broke sharply from its multi-day Balance Area. Upper KRA is 115’23-116’10.
Choppy and between levels.
Considering favoring longs against 1830.
Currently at the mid-point of a multi-month Balance Area.