Stock Market Retreats Amid Profit-Taking: Is There Potential for Further Downside?
Jason Sen | Mar 06, 2024 07:33AM ET
1. Emini S&P March futures collapsed quickly, all the way back towards Thursday's low and strong support at 5060/55, with a low for the day 3 points above.
2. Nasdaq March futures collapsed to first support at 18000/17900 and longs need stops below 17800. (A low for the day at 17,832 keeps us in longs).
3. Emini Dow Jones March futures broke support at 39000/38900 and headed straight for the next downside target of 38550/500, with a low for the day almost exactly here. (Well done if you managed to reverse into a short to take advantage of this move).
Emini S&P: unexpectedly collapsed almost as far as strong support at 5060/55, without warning, although we are severely overbought of course. Longs need stops below 5045.
- This support is so important that a break lower today could even be seen as a short-term sell signal (despite the very strong longer-term bull trend) and we could fall as far as 5010/00 for profit taking on any shorts.
- A bounce from 5005/4995 would be expected but longs need stops below 4985.
- I wonder if we will build a short-term head and shoulders pattern. I am watching carefully.
- If we were to make a high for the day at strong resistance at 5115/25, this would increase the chances of this pattern forming, but shorts need stops above 5135.
Nasdaq March futures longs at first support at 18000/17900 need stops below 17800.
- Profit targets is in the 18130/170 area and a high for the day is certainly possible here.
- If you try a short at 18130/170, stop above 18220.
- THE BEST SUPPORT FOR THIS WEEK SHOULD BE AT 17760/730. As long as this holds, bulls remain fully in control, despite yesterday's aggressive sell-off. Longs need stops below 17630.
A break lower should see 17730/760 act as resistance targeting 17550/520 and even as far as 17400/350 for profit taking on shorts.
Emini Dow Jones March futures broke support & collapsed to the next downside target of 38550/500. I am actually concerned that further losses look likely in this market (it has been the weakest of the 3 indices recently).
- A break below 38400 signals further losses with 38100 a realistic target.
- I cannot rule out an eventual move as far as strong support at 37750/650.
- I would even try a short at 38780/820 with stop above 38880. (I very rarely suggest trading against the major trend).
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If we continue higher we could meet strong resistance at 38950/39000. Only above here puts bulls back in full control.
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