Another Vanishing Rally
Stocks Plunge as Middle East Troop Deployments Loom - Support and Resistance Levels for Next Week
The stock market is struggling. With a rapid sell-off, the S&P 500 is down -5.41% in March alone and is heading toward correction territory. For now, the “vanishing bounces” continue; this was the seventh out of the last eight weeks to feature this pattern. This typically means a green opening driven by extreme oversold conditions, followed by a fading rally.
Lately, the sell-offs have accelerated earlier in the week. While the S&P 500 recovered its Central Weekly Level of $6,700 on Monday, the price action vanished on Tuesday, and the decline intensified by Wednesday when that level flipped to resistance. Our downside levels were met: $6,555 acted as first line on defense on Thursday, and then $6,479 is where the price bounced on Friday. These modeled support and resistance levels continue framing the price action for the week ahead.
These price levels were published on Friday ahead of the weekly activity, you can see how accurate they are to frame price action, the price layers for next week are below.
QQQ opened above the CWL of $599, which was our “line in the sand” for bulls (CWL). Tuesday’s indecisive action signaled weakness, leading to an accelerated sell-off on Wednesday. While there was a temporary reversal attempt on Thursday, it failed to close in positive territory, and the QQQ bounced from its bearish extension target of $577.5 for the week that just ended, the levels for next week are below.
IWM: Already down -7.18% for the month. The bearish target of $241 was reached. After failing to consolidate the CWL on Monday and Tuesday, and on Wednesday $249.1 acted as firm resistance following the Federal Reserve’s announcement.
Geopolitical Context: As mentioned in recent Market Intelligence editions (links below), geopolitical uncertainty adds a layer of complexity that economic data cannot account for. Unlike an earnings or an economic report, there is no scheduled time for attacks on energy facilities. With both the U.S. and Iran showing no willingness for a ceasefire, the market remains sensitive to potential oil spikes and escalating fear.
Oil stabilized this week (-1.37%) at historical overbought conditions relative to weekly technical indicators while volatility remains above 25. If a resolution is not reached quickly, the resulting impact on inflation and the Fed’s pathway could lead to further structural decline in the stock market.
Make sure you read the latest Market Intelligence publications about Oil, they are essential for long term investors and traders:
Market Breadth & Structure: That said, the market structure is suffering extreme damage. The 200-day moving average has been breached for the SPX, DJI, and NDX. Participation is at critical lows: only 12% of S&P 500 stocks are above their 20-day moving average, 19% for the Nasdaq, and 15% for Small Caps. While these levels have marked local bottoms in the past, next week’s updated Central Weekly Levels will be essential to monitor for any potential rally or a continuous selloff.
Unlock the Support and Resistance levels for next week, this publication models the levels for these securities:
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, VXX
Major Stocks: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, BRK.B, LLY, WMT, AVGO, COST, JPM, XOM, PLTR, NFLX, V, AMD
Crypto & Related: Bitcoin, Ethereum, ETHA, IBIT
Leveraged ETFs: TQQQ, SQQQ, UDOW, SDOW, UPRO, SPXS, URTY, SRTY
Premium subscribers can suggest the stocks of their interest during the weekend, so an additional set of levels is posted on Sundays in the paid Subscribers Chat.
Let’s study the levels for next week to navigate where we stand.
WEEKLY LEVELS