2 Days Of Selling Threatens January Lows For NASDAQ, S&P 500

Published 02/21/2022, 12:53 AM
Updated 07/09/2023, 06:31 AM
US500
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US2000
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On Friday, the mini support (the clustering of prices at the lows) from January was breached on heavier volume distribution for the NASDAQ and S&P

The NASDAQ has mostly negative technicals with only the MACD left to turn negative. Friday finished with a 'Death Cross' between 50-day and 200-day MAs which is typically enough to see a larger bearish trend develop. At the very least, a test of 13,095 seems likely and given the higher probability of failure we may be next looking at a measured move down to around 11,500.

COMPQ Daily Chart

The S&P confirmed the loss of its 200-day MA after it failed to regain the moving average—even before it has a chance to breach declining resistance established by recent swing highs.  Technicals are net bearish and selling volume rose to register as distribution.  As with the NASDAQ, an undercut of the January low opens up the possibility for a measured move lower to around 4K.

SPX Daily Chart

The Russell 2000 (via IWM) had managed to hold up a little better than either the NASDAQ or S&P, represented by a stronger relative performance to these aforementioned indices. The index has already suffered a significant sell off, and while it's looking vulnerable to yet another measured move lower it is likely to be the first index to signal a bottom (when it comes).

IWM Daily Chart

Heading into next week we have a NASDAQ and S&P with plenty of opportunity to make larger runs to the downside, but it's looking harder for the Russell 2000 to find sufficient sellers to repeat what has already passed for the index. We have already seen a tail off in the selling volume for the Small Cap Index, so lets see what happens when buyers do make an appearance. 

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