Last Saturday, we analyzed the Nasdaq 100 (NDX) and the semiconductor sector (SMH), noting they were the primary elements capable of impacting the broader market should technology gravitate toward its gaps. Specifically, we identified a magnet at 29,280 for the NDX, representing a -1.8% move from Friday’s close. It’s interesting that the index declined precisely -1.88% filling that gap before showing indecision during the afternoon session.
Furthermore, I highlighted the elevated risk for long positions in semiconductors, given the bearish formations in MU, AMD, and TSM. Ultimately, these stocks dragged the sector, and subsequently technology, lower on a day when non-tech sectors remained neutral to slightly bullish.
Regarding the SPX, there was no weakness in its chart, but given the risk from the tech sector the central daily level (CDL) for today was anticipated on Saturday. The breakdown of 7,554 served as the initial warning before our central weekly level was also compromised.
Daily levels provide early warnings when price action begins to reverse; please see the updated SPX daily levels below. We will also examine the daily levels for key ETFs, including QQQ, SMH, IWM, DIA, VXX, and IGV. Notably, the software sector showed impressive relative strength (consistent with our bullish analysis for MSFT).
Subscribe to the paid plan and unlock the daily levels that will define bullish or bearish momentum for the SPX tomorrow, the respective support and resistance levels, and the most important chart to track this entire week, the one that will give direction to the market for the coming weeks.