S&P 500, Russell 2000 Break Key Trendlines – Deeper Correction Ahead?

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S&P 500, Russell 2000 Break Key Trendlines – Deeper Correction Ahead?

I know there is the smell of fear in the air when I see my readership double as we reach a point where weekly chart factors come into play. Up until last week, markets have enjoyed steady advances since the swing lows of 2023, but that has started to change.

It’s not all doom-and-gloom, but we have to consider a significant change is in play with respect to market trends.

The cracked below its trend line on higher volume distribution with earlier ‘sell’ triggers in the MACD, On-Balance-Volume, and -DI/+DI. On the plus side, there was a successful test of the 50-week MA that may present an opportunity for a ‘bear trap’ *if* it can return above the trendline. There is also horizontal support around 5,700. This week will be about holding these last points of support and not seeing further losses.

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Likewise, the () also saw a trendline loss from a relatively new bull trend. There should be good support at $195, which is also near its 200-week MA (if even that’s a thing).

If we fall below $195, then a move back to $160 becomes a strong possibility. Unlike for the S&P, technicals are net negative.

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Indices that are offering a ‘buy’ opportunity on weekly time frames are the and .

The Dow Industrial Average finished the week on its 2023 trend support on mixed technical strength; ‘sell’ triggers in MACD and +DI/-DI vs ‘buy’ conditions in On-Balance-Volume and Stochastics (momentum).

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The lightly tagged 2023 trend support and may see a second test of support by the end of this week. The last week’s test also coincided with a successful test of the 50-week MA. On the downside, this weekly loss came on higher volume distribution but remains one of the more bullish indices.

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Where things get more ugly is in market breadth. We have 25% of Nasdaq stocks above their 50-day MA, and only 33% above their 200-day MA. 38% of Nasdaq Stocks are on point-n-figure ‘buy’ signal. On a slightly more positive front, the Nasdaq Summation Index is at -500, which has marked major lows in the past, but can fall below -1,000 before a bottom is marked.

For the S&P 500, we have 47% above their 50-day MA and 52% above their 200-day MA, with 42% on point-n-figure ‘buy’ signal. These are more neutral readings and could go either way.

Nobody knows which way the market will break, but you can prepare for it. When markets are above their 200-day MA you look to take profit; when they are below, you buy/accumulate.

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#Russell #Break #Key #Trendlines #Deeper #Correction #Ahead

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