Nasdaq Index and S&P500: All Three Major US Indices Fall Below 50-Day Moving Averages

S&P 500 Stumbles Monday After Getting Rejected at Key 61.8% Level

The benchmark S&P 500 Index (SPX) is lower on Monday after failing to follow through to the upside after Friday’s strong rally. After getting rejected by a short-term 61.8% level at 6915.65, the index fell below the 50-day moving average at 6986.68 and a 50% level at 6888.89, putting it in a weak position early in the session.

New Short-Term Range Forms at 6775.50 to 6915.86 with Key Support at 6845 to 6829

A new short-term range may be forming between 6775.50 and 6915.86, making its retracement zone at 6845.68 to 6829.12 a potential support area. This zone must hold as support or prices could collapse further, leading to a possible retest of last week’s low at 6775.50 later in the week or even the major retracement zone at 6762.10 to 6705.42.

Bulls Need to Clear the 50-Day MA and 6915.65 to Unlock 6993 to 7002

To get excited about the index’s upside potential at current levels, the SPX is going to have to generate strong enough upside momentum after crossing the 50-day moving average to overtake the Fibonacci level at 6915.65. Doing so will give buyers a clean shot at 6993.48 to 7002.28.

Nasdaq Rejected at Major 50% Level at 22959 with Pullback Into Support Zone Possible

The tech-heavy Nasdaq Composite is also in a weak position after getting rejected by a major 50% level at 22959.14. Overtaking this barrier will put the index in a position to follow through to the upside, with the first major target the 50-day moving average at 23277.85, followed by a main top at 23320.62 and a 61.8% resistance level at 23326.83.

On the downside, a new main bottom was formed last week at 22256.76. It was strong enough to drive the market into Friday’s high at 22948.87, just shy of the major 50% level at 22959.14.

Retracement Zone at 22602 to 22521 Is the Key as Buyers Could Return on Successful Test

Given the new short-term range of 22256.76 to 22948.87 and today’s early weakness, we could see a pullback into its retracement zone at 22602.81 to 22521.25. A successful test of this area could form a potentially bullish secondary higher swing bottom that could create the upside momentum needed to finally break out above 50-day moving average resistance.

If buyers don’t show up at 22602.81 to 22521.25, we could see a third test of the long-term retracement zone at 22290.08 to 21881.82, which is potentially major support. If the index starts creeping inside this zone, the 200-day MA at 21903.72 will also hit the radar.

Dow Crosses Below Its 50-Day MA for the First Time Since November 25

The blue-chip Dow Jones Industrial Average is also under pressure on Monday, but the big story is that it has crossed to the weak side of the 50-day moving average at 49027.98 for the first time since overtaking it on November 25. That move eventually led to a series of record highs before forming a major top at 50512.79 on February 10.

The key to near-term direction is the 50-day MA. Is this just a test of the indicator that some traders use to control the intermediate trend? If sellers continue to pound the market, weak longs will eventually take profits, leading to a test of the retracement zone at 48120.86 to 47556.37.

All Three Major Indexes Below Their 50-Day MAs as Selling Pressure Syncs Across the Board

It’s important to note that all three major indexes are now on the weak side of their respective 50-day moving averages, meaning the selling pressure is in sync across the board. This is not just rotation from new economy tech stocks to old economy industrial stocks, but a possible reallocation from the stock market to cash.

More Information in our Economic Calendar.