Nasdaq and S&P500: Year-End Selling Hits Tech Stocks, US Indices Retreat

Tech Weakness and Precious Metals Plunge Drive Monday Selloff

The major stock indices were under pressure on Monday. The selling was primarily driven by weakness in the technology sector. Materials also dropped in reaction to a plunge in gold and silver. Bank stocks also retreated.

Nasdaq Composite: Another Lower Top Threatens Santa Claus Rally

The Nasdaq Composite settled lower on Monday in a bearish, but lackluster trade. The price action suggested long-liquidation as investors squared positions ahead of the new year.

We do have the appearance of another lower top at 23665.15, which is not a particularly bullish sign for those betting on a Santa Claus rally.

The daily chart indicates there is room to the downside with a potential support cluster, formed by the 50-day moving average at 23226.59 and the short-term 50% level at 23178.58, a reasonable target.

Momentum will flip to the upside if buyers can take out 23665.15 and strengthen if the buying is strong enough to overcome 23698.93. A move through the latter will open the door to a test of the record high at 24019.99.

On Monday, the tech-weighted Nasdaq Composite closed at 23474.349, down 118.748 or -0.50%.

S&P 500: Trend Up “Buy the Dip” Mode Intact

The S&P 500 Index was also lower on Monday. It reached 6888.76 before rebounding into the close. The move made Friday’s high at 6945.77 a new minor top. Given the short-term range of 6720.43 to 6945.77, its 50% level at 6833.10 is the first downside target, followed by the 50-day moving average at 6795.70.

With the benchmark index up according to the daily swing chart and trading on the strong side of the 50-day moving average at 6795.70, the trend is decidedly up, which puts the market in “buy the dip” mode. Volume is expected to be below average on Tuesday. Buying strength and selling weakness can cause you to get caught in a whipsaw trade, so dip buying should be the preferred technique.

The benchmark S&P 500 Index finished at 6905.74, down 24.20 or -0.35%.

Dow Jones: Potential Double Top Forms on Light Volume

The Dow Jones Industrial Average was also under pressure on Monday. A double-top at 48886.86 and 48782.00 could be forming but the light volume is not enough to confirm the structure. Furthermore, there isn’t much space between the tops. Nonetheless, classical trading says it won’t be confirmed unless the last swing bottom at 47849.48 is taken out. If that becomes the case then 46812.10 will become the objective.

The trend is up according to the swing chart and the moving average. 50% levels at 48315.74 and 48174.65 are potential support.

If the selling pressure is strong enough to take out the swing bottom at 47849.48 then the trend will turn down according to that indicator. However, the break could be short-lived because buyers could step in to stop the slide at the 50-day moving average at 47476.37 or the longer-term 50% level at 47307.89.

The blue chip Dow Jones Industrial Average closed at 48461.93, down 249.04 or -0.51%.

Looking Ahead: Light Volume Expected as Year-End Approaches

Despite Monday’s weakness, all three indexes are headed for solid monthly gains, with the Dow and S&P 500 on pace for their eighth consecutive monthly gain. Volume could get progressively light as we approach the last day of trading for 2025 on Wednesday so approach the trade with caution.

More Information in our Economic Calendar.