Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Friday's Stock Market Sell-Off - New Downtrend or Just Correction?

Stock-Markets / Stock Markets 2019 Mar 25, 2019 - 04:29 PM GMT

By: Paul_Rejczak

Stock-Markets

Friday's trading session was bearish, as stocks retraced their Thursday's advance and continued lower ahead of the weekend. The S&P 500 index was the highest since the early October on Thursday. So was the Friday's sell-off a medium-term downward reversal or still just a correction?

The U.S. stock market indexes lost 1.8-2.5% on Friday, as investors' sentiment worsened following some global economic data releases. The S&P 500 index retraced more of its October-December downward correction of 20.2% recently. The broad stock market's gauge traded just around 3% below September the 21st record high of 2,940.91. But then it got close to the 2,800 mark again. The Dow Jones Industrial Average lost 1.8% and the Nasdaq Composite lost 2.5% on Friday.

The nearest important resistance level of the S&P 500 index is now at around 2,820, marked by the recent support level. The next resistance level is at 2,850-2,860, marked by the early October local lows. On the other hand, the support level is now at 2,800, marked by the recent resistance level and the daily gap up of 2,798.32-2,799.78. The support level is also at 2,785, marked by the daily gap up of 2,784.00-2,786.73.


The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record highs. But will the index continue much higher above the mentioned previous local highs? Friday's trading session cast some doubts on bulls' power. However, there have been no confirmed negative medium-term signals so far. The index bounced off the previously broken two-month-long upward trend line:

Mixed Expectations Following Friday's Decline

Expectations before the opening of today's trading session are negative, because the index futures contracts trade 0.2-0.6% below their Friday's closing prices. The European stock market indexes have lost 0.2-0.3% so far. There will be no new important economic data announcements today. The broad stock market will likely fluctuate following the Friday's sell-off. However, if the index breaks below the 2,800 mark, we could see more selling pressure.

The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of its overnight decline. The nearest important level of resistance is now at 2,820-2,830, marked by the local highs. On the other hand, the support level is at 2,790, marked by the overnight low. The futures contract trades along the late Friday's local lows, as we can see on the 15-minute chart:

Nasdaq Also Slightly Bouncing

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend after an overnight decline. The market rallied more than 1,700 points from December the 26th local low of around 5,820. But then it fell more than 250 points from its Thursday's overnight local high. The nearest important resistance level is now at 7,400-7,450. On the other hand, the support level is at 7,200-7,250, among others. The Nasdaq futures contract bounced off the 7,300 mark this morning, as the 15-minute chart shows:

Big Cap Tech Stocks - Downward Reversal?

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The market broke above its recent local highs a week ago and then it continued above the $180 level. On Thursday and on Friday the stock accelerated the uptrend and it traded within a resistance level of $190-200. But then it reversed its upward course. We could see some more selling following bouncing off the mentioned resistance level:

Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The price broke above the previous local high early last week and on Thursday it broke above the $1,800 level. However, Friday's trading session was bearish as the stock bounced off the resistance level:

Blue Chip Stocks Remain Relatively Weak

The Dow Jones Industrial Average retraced some more of its early March decline last week, but on Friday it reversed lower. The resistance level remains at around 26,000. And the blue-chip stocks gauge continues to trade below the February local high:

Nikkei Selling Off

Let's take a look at the Japanese Nikkei 225 index. It accelerated the downtrend in late December, as it fell slightly below the 19,000 level. Since then it has been retracing the downtrend. Recently the market broke above its local highs and the 21,000 resistance level. But then it bounced off the resistance level of around 22,000 and retraced most of the recent advance. Today it sold off again, as it got back to the 21,000 mark. The picture looks quite bearish:

The S&P 500 index extended its short-term uptrend last week, as it got the highest since October the 10th again. Then the market bounced off the previously broken two-month-long upward trend line and it fell almost 2% on Friday. So will it continue lower? For now, it looks like a downward correction within a three-month-long uptrend.

Concluding, the S&P 500 index will likely open slower today. Then we may see some short-term uncertainty following last week's Thursday's rally and the Friday's sell-off.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up now.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
SunshineProfits.com

Stock market strategist, who has been known for quality of his technical and fundamental analysis since the late nineties. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. Paul is the author of Sunshine Profits’ premium service for stock traders: Stock Trading Alerts.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Paul Rejczak Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in