Markets were weak on December 13, with the S&P 500 dropping by 91 bps and the Qs dropping by 1.44%. Stocks dropped right after the open on Monday and tried to recover late in the session, but a significant sell imbalance of nearly $3 billion sealed the deal for the index, with the S&P dropping by almost 40 bps in the final 15 minutes of the day to close at the session lows.
The intraday chart indicates that this may be the start of a wave three down, and we could see the index drop back to 4,600 and either fill the gap from last Tuesday or come close to it over the next day or at most two. We have also completed on the a bearish megaphone pattern and started what looks to be a five wave impulse lower. I think ultimately we return to the lows established the first week of December around 4,500.
The daily chart of the S&P 500 has that bigger megaphone broaden wedge pattern that appears to suggest we ultimately get a move back to 4,400. Additionally, we can see the trend for the RSI turned lower. With the big PPI print later today, the FOMC on Wednesday, and Quadruple witching on Friday, this week will be much more volatile.
But more important is that the big megacaps stock are the ones that have been propping this market up over the past couple of weeks, and there are signs that it may be over. If these big stocks start to turn lower, there will be nothing left to keep the market afloat.
The number of stocks making new highs minus new lows are extremely weak across the entirety of the US markets. Yesterday there were 311 more new lows than new highs, along with a weakening trend.
Apple
Apple (NASDAQ:AAPL) had a big day on Monday, rising to resistance around $182, and then reversing lower to finish down by 2% at $175. The stock is extremely overbought here, with an RSI that is around 70, and now with a broken uptrend, and tons of gap to fill down to $162.
Amazon
Amazon (NASDAQ:AMZN) fell sharply yesterday, despite what I thought was a really big positive after Cowen named it a Best Idea for 2022. Very surprising price action. The uptrend is broken along with the weak price action doesn’t bode well for the direction of the stock. I still see 3,200 coming.
Nvidia
NVIDIA (NASDAQ:NVDA) fell nearly 7% yesterday, and the stock is very close to breaking support at $281 and likely on its way to filling the gap at $230.
