A look at the Nasdaq and S&P
Stocks are trading near lows with Nasdaq down -1.20% and the S&P down -0.90%
What does it look like technically.
Looking at the Nasdaq hourly chart, the price today gapped lower and below the 50 hour MA (white line). The corrective move did take the price back above that 50 hour MA, but the news about the Senate delay of corporate tax rate has sent the index back below that MA line (at 6746.85 now).
The next target is the 100 hour MA (blue line in the chart above) at 6685.84. The 200 hour MA (green line) comes in at 6634.01. Between that is the 50% retracement of the last move higher is at 6656.72. Those are targets if the price can now stay below the 50 hour MA.
On the S&P, the picture is a bit more bearish technically. The price fall on the opening today and stalled at the 100 hour MA (blue line in chart). The rebound did move a little above the 50 hour MA but the downside momentum was resumed on the news. The move lower took the price below the 100 hour MA at 2576.78 currently. So unlike the Nasdaq, the S&P is now below the 100 hour MA.
Stay below the 100 hour MA is more bearish now - especially since that MA did hold support earlier today. The 200 hour MA comes in at 2562.67 and is the next downside target technically.
Now we have seen this rodeo time and time again. The market gets upset about something, the price falls, and the money comes flowing back in. However we never know what might be a tipping point for a larger correction. So we have to be prepared. We are also probably more overbought.
Looking at the daily chart of the Nasdaq (see chart below), the price has not been below the 100 day MA in over a year (right before the election). The price has only been below the 50 day MA for a handful of days in the last year.
The current price for the Nasdaq is still 150 Nasdaq points away from the 50 day MA. We are down -88 points now. So there is potential for more downside - just to get to the 50 day MA. Holding that would still keep the bulls fully in control. So we are a bit overbought.
Nevertheless, as mentioned, we have seen this rodeo before. So what we need to do is let the price action tell the story. The shorter term MA on the hourly chart will help to tell how the story plays out.
It always does. It always will.
PS. Looking at the S&P index, the price is 35 points from the 50 day MA (see chart below). The price has not traded below the 100 day MA since November 9th. It is at 2492.29 (currently at 2569).
