Bad Day At The Office For Markets

Yesterday's weak finish set a precendent for today. Premarket action had offered some cause for optimism, but strong economic data sent markets packing, and it will take something substantial to indices out of their current trading ranges.

The Russell 2000 ($IWM) is still very much working off its Christmas hangover. The sizable red candlestick casts a substantial gloom on the index. We just missed a test of the 200-day MA in September, and it's hard to see any recovery coming without a fresh test of this average. But even then, it might not be enough. The last big push below its 200-day MA was in October 2023. Another such move in 2025 would bring short term pain, but would likely be good in the long term.

The S&P had a Santa rally that clawed back the losses of the big red candlestick, but it wasn't enough to challenge the "bull trap". Today, we saw a sell-off triggered by supply at the S&P's 20-day MA. We may yet see buyers try to defend the December swing low, but it will need a large does of positivity to get the index back above its 20-day MA. Like with the Russell 2000, the 200-day MA beckons. It's last major dip below this moving average was in May 2022.

The Nasdaq is only the index hanging on to net bullish technicals. However, it's also the index with the clearest break-and-tag of resistance. There is stil a decent area of support around 19,350 to work off, with the 50-day MA also nearby to lend a hand. If looking for a longside opportunity (risky though that is), this is probably the best index to try. Although you would also have to overlook the substantial bearish distribution day.

Joining the Nasdaq in the resistance tag-and-go is the Semiconductor Index. It has really been pegged by former support - turned resistance - since November. Technicals are net positive, but how long can these hold on?.

Bears might find more joy with the Dow Jones Industrial Average. It's already toying with November lows with a bearish cross between 20-day and 50-day MAs. Volume climbed to register as distribution.

For tomorrow, watch for breaks of December lows in the Dow Industrial Average and/or Russell 2000 ($IWM). If there is a chance for a bounce, the Nasdaq is the best opportunity, but don't be wed to it.

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Investments are held in a pension fund on a buy-and-hold strategy.

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