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S&P 500, Nasdaq Could Test 50-Day Moving Averages This Week

Published 02/19/2024, 01:54 AM
Updated 07/09/2023, 06:31 AM

Last week started with breakdown gaps for the Nasdaq and S&P and continued with moves to close more gaps, before peaking on Friday and reversing. Consequently, the likelihood of further losses heading into this week is quite high.

SPX-Daily Chart

If we see losses, then 50-day MAs are the likely test. Since 2024, both the S&P and Nasdaq have be holding 20-day MA support, but a fourth test of the latter moving average would likely be a step too far (for the moving average to hold as support).

Adding to the selling pressure are MACD 'sell' triggers. And as a final point, the Nasdaq is underperforming relative to the S&P, suggesting that if there is an index to crack first, it will be the Nasdaq.

COMPQ-Daily Chart

The Russell 2000 IWM had managed to post a new swing high before easing back below its peak in a potential bearish harami cross. Volume rose in distribution, compounding the initial selling. Technicals are net positive and the index is leading both the S&P and Nasdaq.

IWM-Daily Chart

If we start the week with a down day, then an undercut of last week's lows would look to be a minimum goal. Both indices have to work off their historic price extremes relative to their 200-day MAs. Investors have little to fear as such weakness will benefit the dollar-cost-average approach.

Latest comments

Well said!
always the best.. u have been on target with every article. envy your precision
Well said, thanks Declan
Always some of the best analysis
Seasonal weakness is March so would not be suprised to see a dip soon as it needs a breather
actually this specific week is the weakest at all times. from 17-28 February
Thanks for this update! Appreciated 👍
cheers Declan
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