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Not Strong Enough To Overcome Selling, More Lows For S&P, NASDAQ Likely Ahead

Published 03/08/2022, 12:14 AM
Updated 07/09/2023, 06:31 AM
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So the market has spoken and the selling continued on Monday. Whatever defense traders were able to mount on Friday was swiftly taken out yesterday. However, the Russell 2000 again came out looking the best.

Hardest hit was the NASDAQ as it lost 3.6% in a clear push into the large white candlestick marking the February swing low reversal. Yesterday's selling came with a return 'sell' trigger in the MACD to go with existing 'sell' triggers in other technicals. Relative performance took a large tick lower. The only salvation for bulls was the lower volume; despite the big price loss there was no confirmed distribution.

COMPQ Daily

 

The S&P was similarly challenged. Just like the NASDAQ, the S&P pushed deep into the reversal white candlestick, but it did so on higher volume distribution. There was a new 'sell' MACD to go with the selling but there was a small improvement in relative performance.

SPX Daily
 
The Russell 2000 (via IWM) experienced heavy losses too, but the loss only started to move into the `bear trap.` The selling ranked as confirmed distribution—although overall trading volume remains light. Despite the loss, the index ticked higher in relative performance and the MACD retains its 'buy' signal.
 
IWM Daily
 
The push into the 'bear trap' will likely result into a retest of these lows, although the Russell 2000 could still regain support before this happens (the NASDAQ and S&P have probably moved too far from this support for such a rescue).
 
How markets react to the move towards the low now that the pent-up weekend action has been released will be of interest, but for the NASDAQ and probably the S&P too—new lows are looking more likely now.

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