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S&P 500 Ripe for Pullback as Bearish Rising Wedge Forms: Support Levels to Watch

Published 03/05/2024, 03:21 AM
Updated 09/20/2023, 06:34 AM

The S&P 500 finished lower yesterday, dropping by around ten bps and led lower by Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), and Alphabet (NASDAQ:GOOGL).

Yes, they all fell by 2% or more, and the only reason why the index was down ten bps was that Nvidia (NASDAQ:NVDA) was up 3.6% and offset all of Apple’s declines.

SPX Index Table

Bloomberg

The XLK was flat yesterday, and we can see that the XLK was not able to advance beyond the upper trend line in the broadening wedge pattern.

It will be interesting to see if the XLK moves lower today and heads toward the lower trend line of the wedge and the giant gap at $199.

XLK-1-Hour Chart

Meanwhile, one reason the XLK may continue lower is Apple, which fell by 2.5% yesterday and is now at its lowest point since November.

There’s certainly a technical case for Apple to go lower at this point, and perhaps a fundamental one, given the weakness of iPhone sales in China in recent quarters, and less than stellar results.

A return to $166 doesn’t seem impossible, given that the stock has broken support at $180.

Apple Inc-1-Hour Chart

Meanwhile, another rising wedge formed in the S&P 500. This one seems bigger and broader than the one last seen in mid-January and again in mid-February, both of which retraced 50% and 61.8% of their respective moves higher.

So, we will see how the market treats this pattern. There have been three clear touches of the upper trend line and just two on the lower trendline, so if the index gaps lower today, and below 5,125, then the rising wedge is broken, and lower prices and that potential gap fill at 4,950 may be on its way.SPX Index-1-Hour Chart

We will see what happens today. today, ISM services data will be available at 10 AM.

Original Post

Latest comments

Grateful for impressive Outlook. keep it up dear.
Hedge Funds pump and dump! They have been feeding the cattle for just this moment. Most 5-day stock gains have been erased by these scavengers.
u were once the President of the Bear Factory but now u r the Vice President of the Bear-Bull Factory
Michael, it may help many for you to explain 61.8% and the fib #'s you look at. EWP & Fibs are beyond most unless you are trying to attract a professional audience. As always, thank you for your work!
👍 good technical data
"ISM services data will be available at 10 AM" - glad for the reminder 🙏
Who determined where thise lines start and end? By the way, where dod you order your crystal ball from? Was it made in China?
I suggest you train yourself first, then write.
Start with Math then jump to Statistics and Probabilities.
Both S&P and NASDAQ are toying with a pullback. For this period in time, the market has bucked the weak seasonal tendency that takes place Feb and early March. However, Nasdaq McClellan Oscillator (NAMO) is displaying weakening spikes and Nasdaq 100 Bullish percentage has been divergent since Jan 24, slight increased on Feb 21 but currently leveling off. The canary in a coal mine, LABU, is exhibiting weakness also. Most hedge Funds are lately active boosting stocks relative to Retail investors/traders taking advantage of the AI momentum and trader's psyche; especially in NVDA and Semiconductor sectors. Fed's REPO seems to be tightening the money flow in the system.
Dead wrong.
why ?
dead right
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