Bears Crack 50-Day MA’s
The major indexes tested backup support levels to close out last week with the Nasdaq and the S&P holding their 50-day moving averages on Friday. The intraday reversal also eased volatility which had spiked above key resistance as the market was hitting fresh monthly lows.
The Nasdaq traded down to 22,563 while ending at 23,004 (-0.2%). Support at 22,500 held. Resistance is at 23,500.
The S&P 500 settled at 6,728 (+0.1%) after bouncing off a low of 6,631. Support at at 6,600 held. Resistance is at 6,750.
The Dow tapped a low of 46,495 before closing at 46,987 (+0.2%). Support at 46,500 was stretched but held. Resistance is at 47,250.
Earnings and Economic News
Before the open: Pagaya Technologies (PGY), Instacart (CART), Venture Global (VG)
After the close: CoreWeave (CRWV), Rigetti Computing (RGTI), Plug Power (PLUG)
Economic News
None
Technical Outlook and Market Thoughts
For the week, the Nasdaq was down 3% and the S&P fell 1.6%. The Dow dipped 1.2% while the Russell was off 1.3%. Year-to-date, the Nasdaq has rallied 19% and the S&P has jumped 14.4%. The Dow is higher by 10.4% and the Russell has gained 9%, for 2025.
The bears did some technical damage last week but the bull held backup support levels on a dime before leading a strong second half rebound on Friday. Nvidia (NVDA) fell 7% for the week and had the biggest impact on the overall market as it is a heavily weighted index stock.
Meta Platforms (META) and Microsoft (MSFT) were also down 4% for the week with the latter joining the former in officially closing below its 50-day moving average. Meta is testing May support levels and Microsoft is right at key support from early September.
The Russell 2000 bottomed out at 2,380 on Friday with mid-September and key support at 2,375 holding by a nickel. Closes below this level would suggest downside pressure towards 2,339-2,275.
Key resistance is once again at 2,475 but closes above 2,500 ate needed to ease some of the selling pressure.
The Nasdaq kissed an intraday low of 22,563 and hit our 4% downside target coming into last week. Key support is at 22,500 and the 50-day moving average were cracked but levels that held. We mentioned there was further weakness down to 22,000 that would have represented a 6% pullback and remains in play if Monday’s remains weak.
Key resistance at 23,500. A close above this level gets 24,000 and the recent all-time high at 24,019 back in play.
The S&P 500 hit a low of 6,631 with mid-October and upper support at 6,650-6,600 and the 50-day moving average getting cracked but levels that held. Closes below the latter could lead to,selling pressure down to 6,500-6,350.
Resistance is at 6,750-6,800 and the bottom of the current uptrend channel. Closes above 6,850 would suggest another near-term bottom is in.
The Dow fell a nickel below key support at 46,500 but easily held its 50-day moving average on Friday. We highlighted closes below this level could lead to a further fade to 45,750 and that is still the case.
Resistance is at 47,250-47,500. Closes above the latter would be a more bullish signal for a return trip towards 47,750-48,000 with the October 29th all-time peak at 48,040.
The Volatility Index (VIX) spiked to a high of 22.72 but miraculously stayed below 20 into Friday’s close. We have been a broken record saying closes above 20-24 would be a very bearish development for the stock market and we will continue to watch these levels going forward.
Support is at 17.50-17 the 50-day moving average following the close back below the 200-day moving average. A close below the latter could imply weakness to 16-15.50.
The relative strength indexes (RSI) for the major indexes are hovering around the 50 level and is typically a neutral reading. The late October highs pushed 70 and overbought conditions and last week’s losses reset this indicator once again.
As we head to press, there is news the government shutdown could come to a end this week as a bipartisan agreement is said to be coming together. Although it could pass the Senate on a procedural vote, it would still need to get through a House vote.
In any event, futures are showing a higher open for Monday. We could have new Alerts after closing two more winners on Friday. The Teva Pharmaceutical Industries (TEVA) December 24 calls skyrocketed 275% while the Rivian Automotive (RIVN) December 15 calls jumped 60%. This pushes our directional alerts track record to 49-14 for a 78% win rate.
We have updated our current Alerts so let’s go check the action.
