Geopolitical Shocks and Shrinking Payrolls Hit the Market
Support and Resistance Levels for a Volatile Environment: Indices, Futures, ETFs, Megacaps, Metals, and Crypto
U.S. equities closed a turbulent week. The Nasdaq 100 posted a -1.3% weekly loss, outperforming the other major indices despite of the decline. The Dow Jones Industrial Average declined -3.0% for the week, the S&P 500 lost -2.0%, and the small-cap Russell 2000 fell -4.0%, reflecting the reduced risk appetite that defined the period.
Our Support and Resistance levels continue to frame the price action, with the SPX oscillating between the anticipated Central Weekly Level (CWL) of $6,882 and the extended bearish target of 6,745. We see the same pattern in IWM which topped slightly above its CWL of $261.0 before selling off in a zigzag pattern during the week to the $249.0 overextended bearish level.
This is a complex market environment, where rapid oversold conditions are met with aggressive buying, yet rallies fade quickly, such as the Monday afternoon top following a morning selloff, or the Wednesday top during an indecisive afternoon. Conversely, selloffs are frequently met with recovery attempts, as seen on Tuesday morning and Friday afternoon.
The levels continue to work symmetrically and with high precision, but the constant breach of these central levels makes the current market environment peculiar. The 2H chart for the SPX presents the main levels from the last three weeks; all were modeled in advance, and you can see how the price has moved inside the ranges and how choppy the moves have been.
After ten years in the market, and two years of this Substack, the good news is that these types of markets historically do not last long. A resolution is near, and the targets will continue being met with a more directional price action.
The Power of Individual Names
Since November the indices had been directionless until the last two weeks, the loss of the central monthly level (CML) for the major indices and megacaps and the VIX above 20 is a condition that brings the volatility mentioned.
From the setups studied last week, AAPL reached its bearish target of $254, PLTR and NFLX printed bullish momentum following their setups, TSLA made it to its bearish target without breaching central levels, and V reached its bullish target of $326 with precision before reversing.
All the securities will continue being studied with their targets, AMD is back to our watchlist so we continue focused on megacaps and high volume assets ( complete list below).
Geopolitical Risk Reprices Energy
Escalating conflict in the Middle East became the dominant macro variable of the week. The global oil supply has been impacted, and sent crude futures sharply higher. Average U.S. gasoline prices rose 27 cents to $3.25 per gallon in the days following the military actions. The energy shock introduced a compounding headwind for corporate margins, consumer spending power, and the Federal Reserve’s inflation management. Markets are now repricing the geopolitical risk premium across energy-sensitive sectors, and that recalibration is not yet complete.
Labor Market Deterioration Adds Pressure
A significantly weaker-than-expected employment report amplified selling pressure on Friday. The U.S. economy lost 92,000 jobs in February, falling sharply short of the 58,000 additions consensus had projected. The unemployment rate moved up to 4.4%. Prior-period data was also revised lower: January job growth was marked down to 126,000, and December was revised to show an outright loss of 17,000 positions. The negative revision trend is notable. It signals that the labor market softening has been underway longer than initial readings suggested.
Supplementary data offered little offset. January retail sales declined 0.2%, with core sales flat. Taken together, the week’s economic prints present a picture of a slowing consumer, a deteriorating labor backdrop, and rising input costs from energy, a combination that complicates any near-term optimism about earnings stability.
Moves Don’t Occur in a Straight Line
Last week, I highlighted the Monthly Gravestone Doji for February, which served as a clear warning of a bearish move for the Dow Jones. Today, after a 3% selloff in a single week, it is worth noting how oversold the “godfather of the indices” has become.
Friday’s candle shows buyers stepping in after the lows of the day. Furthermore, price action is currently below the Lower Daily Bollinger Band, a rare condition that typically triggers a bounce. How sustainable will this move be? Our Support and Resistance levels will provide the answer, but for now, this extreme condition combined with an oversold oscillator is well worth watching.
Let’s deep dive on the levels for next week, this is our core watchlist:
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, SH, PSQ
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
By consistently analyzing the same “Megacaps” and key Indices, you gain a deep familiarity with their price action. This allows you to spot capital rotation early and refine your entry timing with precision while others are still scanning for ideas. If you trade some of those securities, this publication is for you.
Paid subscribers can also suggest their own securities every weekend, and their weekly levels are modeled for the week ahead. For example, IGV was a common suggestion last week, paid subscribers knew that the conditions were bullish above $80.3, con bullish targets at $84.3 and $87.1; the price closed the week at $87.9.
Let’s begin, unlock all the levels upgrading your subscription:
WEEKLY LEVELS