The bears made a midweek appearance to push support that served as prior resistance as the bulls backed off their record run. The action has felt bearish since Monday’s short-covering rally although a back test to support is a good thing – as long as it holds
The Dow fell 101 points, or 0.6%, to end at 16,613. The blue-chips made a brief trip into positive territory to 16,717 before a slow fade and accelerated drop to 16,595 into the close. The action was enough to keep me slightly cautious as the bears cracked 16,600 but the bulls have wiggle room to 16,400-16,350. Resistance is at 16,700-16,800.
The S&P 500 declined 9 points, or 0.5%, to settle at 1,888. The index stayed in the red all session long and touched a low of 1,885 into the close. Support at 1,875 easily held but needs to be watched. The bulls are still on a mission to get a close above resistance at 1,900.
The Nasdaq lost 29 points, or 0.7%, to close at 4,100. Tech opened lower but made a brief 2-point pop into positive territory to 4,132 before testing 4,093 ahead of the bell. This was the third failed attempt to clear 4,150 by the bulls and although they held 4,100, there is further weakness to 4,075-4,050.
The Russell 2000 tanked 18 points, or 1.6%, to finish at 1,104. Wow. I had warned volatility would pick up this week and specifically said to watch the small-caps as they tend to lead both bull and bear markets. The bears pushed 1,102 and the bulls held 1,100 but the stay above the 200-day Moving Average (1,116) was short lived.
The S&P 500 Volatility Index ($VIX, 12.17, up 0.04) ended flat following a brief spike to 12.51 after the open. I’ve talked about the 12.50 battleground over the past few weeks with the possibility of 52-weeks lows (and possibly single-digits triggering) but any closes above 13.50 might signal a short-term top.
Futures look like this ahead of the open: Dow (-5); S&P 500 (-1); Nasdaq (+1).