It has become increasingly volatile as key market indexes have endured sharp price swings on an intra-day, daily, weekly, as well as on a monthly basis. Some of the heaviest trading volume occurred over the past 2-weeks. Major market indexes are producing numerous technical patterns such as negative outside months, inside weeks, gap downs, and positive outside days.
What does this all mean? The increasing frequencies of these different price patterns hint of market participants lacking conviction and/or are confused about the general direction of the marketplace. These technical patterns are the reflection of the rapidly changing supply and demand equilibrium of the market in question. It also suggests that the bulls and bears may be converging toward a major battle, and the outcome of this battle may help to decide the next major market trend.
After strong and persistent selling over the past week, key U.S. stock indexes including S&P 500 Index (SPX), Dow Jones Industrial Average (INDU), and NASDAQ Composite Index (COMPQ) closed the day near their respective intra-day highs thereby generating positive outside days on 3/10/20.
The question then becomes – are these daily reversal patterns signaling major market bottoms for the respective indexes or are these technical oversold rallies that will fade?
Enclosed below we have updated key technical levels to reflect the changing market conditions. Keys supports move up to the 3/10/20 intra-day lows. Key resistances appear to be converging near 50%-61.8% retracements, key moving averages (50-day and 200-day), and 2/25/20 technical breakdown. Convincing breakdowns below the 3/10/20 lows warn of the next major decline. Convincing breakouts above these key resistances can trigger a sustainable recovery possibly back to retest their respective all-time highs.
Summarized below are the updated technical levels:
S&P 500 Index (SPX – 2,882.23)
Key support = 2,734.09 (3/10/20 low)
Key resistances = 3,052-3,064 (200-day ma and 50% retracement) and 3,137-3,141.58 (3/3/20 high and 61.8% retracement)
Dow Jones Industrial Average (INDU – 25,018.16)
Key support = 23,690.34 (3/10/20 low)
Key resistance = 27,102-27,323 (3/4/20 high, 200-day ma, and 61.8% retracement)
NASDAQ Composite Index (COMPQ – 8,344.25)
Key support = 7,930.43 (3/10/20 low)
Key resistance = 9,070-9,088/9,108 (3/3/20 high, 2/25/20 breakdown, and 61.8% retracement)
Source: Courtesy of StockCharts.com
Source: Courtesy of StockCharts.com
Source: Courtesy of StockCharts.com
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