Nasdaq Below 50 DMA, S&P 500 Tests Support, Semiconductors Struggle: What's Next?
Declan Fallon | Aug 14, 2023 03:06AM ET
Market weakness continued to strike the market, but selling volume remained light. The Nasdaq moved further away from support, all but confirming the channel break. But, it dropped below its 50-day MA.
Technicals are net negative, but intermediate-length stochastics have some way to go before becoming oversold. While the losses are quite orderly, they could continue for several days, if not weeks.
The Semiconductor Index is the problem child. After pushing the breakout from the consolidation, it has since drifted back to the apex, cut below the 50-day MA, and given up support of consolidation resistance-turned-support, which has turned into resistance yet again.
The problem is that while support could reappear at 3,400, it's really the 200-day MA. When it converges with 3,200, we will likely see demand return. Until then, expect further losses.
The S&P 500 is now down at channel support, which has also converged with the June peak at 4,450. Intermediate-term stochastics are also at an interesting juncture, finishing the week at bull market support (the midline).
While markets are in a weakening trend, I would expect some form of bounce here, even if temporary.
The Russell 2000 (IWM) has its own support level to work with as it fast approaches its 50-day MA, which is just above the June swing peak.
Intermediate-term stochastics is above the mid-line, and as long as this continues, small caps remain bullish.
Get The News You Want
Trading volumes are still light, so it's hard to get too excited about any breakout or breakdown. Aside from Semiconductors, losses have been relatively orderly. I don't expect this to change unless there is a pick-up in volume.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.