Only the bears returned from the long weekend.
On Tuesday, markets opened in the red and declined throughout the day. The carnage was widespread and spared few stocks.
The indexes closed at their lows…
- Dow Jones -2.1%
- Nasdaq -2.5%
- S&P 500 -2.0%
- Russell 2000 -3.0%
A mere 12% of stock managed to end the day higher, 86% ended lower.
Sector Round Up
All 11 sectors ended Tuesday lower. Some sectors fared better than others.
At the top…
- Consumer Staples (XLP) -0.4%
- Energy (XLE) -0.5%
At the bottom…
- Industrials (XLI) -2.3%
- Technology (XLK) -2.4%
- Consumer Discretionary (XLY) -3.3%
The Market Hates Uncertainty
Many headlines blamed fear of rate hikes for the sell-off. But there was nothing new to price in since Friday’s mixed session.
The potential of a Russia/China alliance was the most notable development that could have sparked fresh fear in the markets.
- The U.S. Gov’t and the New York Times suggested China could be considering helping Russia’s war efforts in Ukraine.
- The Wall Street Journal said China wants “peace talks”
The market doesn’t know what to expect.
Uncertainty favors the bears.
The S&P 500 fell below an important psychological level during yesterday’s session.
It closed under 4,000 for the first time in a month.
With that in mind, let’s look at two additional levels … The 200 & 50-day moving averages.
On the far left, you’ll see a “death cross” when the 50-day moves below the 200-day moving average. It’s a sign that lower prices are ahead.
When you see a “golden cross” like the one on the right-hand side of the chart, you can expect to see higher prices.
Take note that immediately after the “death cross” last year, the market surged higher before losing 25% of its value.
We’re watching to see how the market interacts with these levels.
Here’s our current reading….
- The VIX practically tied its highest close of the year, bearish
- RSI levels are all neutral
- The Put-to-Call Ratio remains oversold, bullish
We have switched our outlook to neutral.
At 2 PM today, the minutes from the most recent FOMC meeting will be released.
The market will swing wildly as the algos scan for meaning and beat each other up.
Remember, the market’s reaction is more important than the words in the doc.
*AMAM support at $4
*RMTI support at $2.20
*ADXN support at $1.60
BLBD support at $19.50
GRIL support at $1.10
SERA support at $3
DPRO support at $2
AN support at $140
NRDS support at $18
QNST support at $16, resistance at $18
VKTX support at $11
INDI on watch
Secondary watchlist … float over 100 million:
MGNI support at $13, resistance at $14
RBBN support at $4
HLX support at $8
NYT support at $40
MIR support at $9