The Russell 2000 has fallen in four of the past six sessions with Friday’s low at 2,599. Key support from early January at 2,600 was breached but held. There is wiggle room down to 2,575 with a close below this level indicating a near-term top with additional weakness to 2,550-2,525.
Resistance is at 2,650-2,675. Our October 8th Price Targets were at 2,600-2,650 and we predicted possible “stretch” up to 2,700 for the index on January 9th. We also said there could ongoing strength up to 2,725-2,750 if cleared. The previous Thursday’s all-time high nearly split those price targets after topping out at 2,735. The RSI (relative strength index) closed at 49.90 on Friday to give a neutral reading heading into the week.
The S&P 500 held major support at 6,925 in back-to-back sessions. Backup help is at 6,850 and the 50-day moving average with Thursday’s low at 6,870. Closes below these levels would also imply a possible top.
We have been talking about a final push to psychological resistance at 7,000 and that was cleared, but not held, on Wednesday’s record run to 7,002. Closes above this level could lead to a breakout up to 7,150.
The Dow has basically been in a 1,000 point range since January 5th, or 19 sessions. Key support at 48,500 was cracked on Friday’s fade to 48,459 and the January 20th tumble to 48,428. Closes below 48,500 and the 50-day moving average would be bearish development with additional risk down to 48,000-47,750.
Resistance remains solid, and specifically, at 49,600 on a recovery of the 49,000 level. The January 12th record high is at 49,633 and our Price Target from February 23rd, 2024 is at 50,000 for the blue-chips.
The S&P 500 Volatility Index (VIX) is now forming a fresh symmetrical off of the November 20th peak at 28.27 and the December 24th low at 13.38. The helps confirm our overall market warning on closes above 20 on the VIX. If held on MULTIPLE closes, the bears will likely push 24-30.
Support is at 16.50-16. Closes below 15 are likely needed to keep all-time highs in play for the major indexes.
The 4Q earnings started to peak last week following the bevy of high-profile Tech companies that reported. There are still some heavy hitters coming up to bat this week, especially on Wednesday and Thursday, with Google and Amazon after the close on both days.
In review, key support levels to watch for the major indexes: Nasdaq 23,250-23,000; S&P 6,850-6,800; Dow 48,500-48,000; and Russell 2,600-2,575. If lower levels of support start to crack across the board, February (and March) could look a little like last year’s price action and an outcome we have been penciling in for months.
The February monthly options have 18 days before expiration on Monday’s open and the March monthly options will have 46 days. We like to give directional alerts 4-7 weeks to play out so we are now targeting the March monthly options and possibly April calls and puts for our directional alerts. April options have 74 days before expiration.
Futures are pointing towards a nasty open for Monday. Dow futures are down 477 points; Nasdaq futures are stumbling 479 points; S&P futures are sinking 95 points; and Russell futures are getting hit for 45 points.
