The stock market rally lost ground today, pulling back from resistance levels and triggering a sell-off in all major indices, with the small caps being hit the hardest.
The Russell 2000 (IWM) led the indexes lower with losses of 1.36%. The Nasdaq dropped 1.19% to $12,493.93, and the S&P fell 0.42% to 4122.47, marking its fourth consecutive day in the red.
The two key tech indexes, QQQ and SMH were down -1.13% and 4.19% respectively today.
SMH's sell-off drove the Nasdaq lower, and in response to a sell-off in semiconductor stocks (SMH), the stock market sagged and appeared to lose all momentum. The S&P 500 lost ground today and retreated into negative territory after hitting resistance.
As you can see in the chart above, the QQQ is still higher than its early June swing highs, which is a pivotal support level. This is its key support level to hold.
Granny Retail (XRT) sank -3.84%, suggesting that Monay’s rally may not have further to run. Only time will tell, but XRT sinking yesterday is not a good sign and could signal that this rally is running out of steam.
High inflation and declining consumer confidence do not portray a great investment outlook as investors anxiously prepare for the CPI inflation data.
As we mentioned yesterday, if the CPI report doesn't upset the uptrend, there's potential support or resistance, depending upon which side of the trend you are on. If inflation is muted or higher than expected, expect a the immediate support or resistance levels to be broken.
ETF Summary
S&P 500 (SPY) 412.36 now resistance with support at 410.21 slightly under the August 01, 2022 close of 410.77.
Russell 2000 (IWM) 191.05 the resistance with support at 189.90.
Dow (DIA) 328.84 resistance and support at 327.09.
Nasdaq (QQQ) 318.20 1st level of resistance and support at 315.96.
KRE (Regional Banks) 64.49 key resistance, support level at 63.79.
SMH (Semiconductors) 233.62 resistance and support at 224.65.
IYT (Transportation) 239.86 resistance and support at 236.55.
IBB (Biotechnology) 131.65 resistance point and 128.49 is support.
XRT (Retail) 68.83 resistance point and with support is at 65.91.