Why It’s a Critical Point for the Stock Market

It was a strong selloff in the Stock Market today, with all three of the major indexes falling hard. If we look at the individual charts, we can see that there are major technical factors in play, and the reaction to them could be a precursor to what lies ahead.

Let’s start with the Dow. It has now spent almost a month living just below its 200 Period Moving Average. Yesterday it was tested once again, but today we saw it fall away from it. Watch this important indicator closely – it’s been stubborn, and it should help us determine where we go from here.

Now let’s turn our attention to the S&P 500. The pullback on this index could mean that we are forming a lower high. That would of course be a bearish indication. If we see further downward movement, then we would indeed have a lower high established and we should look for bearish sentiment to take control.

Finally, we see something rare on the NASDAQ 100 – a down bar! Now, one bar doesn’t normally mean much, but the index closed at its lows. So while the tech stocks have seen all-time highs the last few days, we may see the reality of an economy struggling with a global pandemic finally setting in.

We’ll be monitoring these three major indexes closely in the coming days. The clues that we have mentioned for all three of these indexes should tell us how the stock market sentiment plays out into the end of the week.

Jeff Drake
True Edge Trading