S&P 500 falls on pressure from retail stocks, weak jobless claims
Markets are vulnerable to any single day of heavy selling as they have been achieving only modest gains recently. The good news, we haven’t really seen that with any of the lead indices. The one exception was Bitcoin. The day after it posted it’s breakout, it reversed into a bull trap on higher volume distribution. Since then it has undercut its 50-day MA with technicals net bearish. I wouldn’t be surprised if this drifted all the way back to 100K and its 200-day MA.
It was disappointing to see the Russell 2000 (IWM) drift back to breakout support after it had cleared its July base. Technicals are mixed but relative performance is moving in the Russell 2000’s favor, and momentum is firmly with bulls. We could be looking at a buying opportunity with the 20-day MA nearby to lend support.
There was a small breakout in the S&P 500, so it wasn’t going to take much to reverse it. The losses are similarly small, but the breakout is done and the 20-day MA is all that is stopping it from a bigger move lower to its 50-day MA.
The Nasdaq has lost more ground relative to its breakout than other indices and is nearest to its 50-day MA. Again, there is no real damage here and it would take alot to suggest something more bearish was emerging.
There is no harm in taking some profit here if you have banked gains. We are not seeing any significant weakness and markets aren’t overbought enough to suggest a major sell-off is coming. However, this low-key selling could continue in the near term, and we are approaching the seasonal weak period for markets, so don’t be caught short.