Correction has begun!
DOW Friday Closing Price - 50866SPX Friday Closing Price - 7383
NASDAQ Friday Closing Price - 28957
RUT Friday Closing Price - 2833
All indexes generated negative reversal weeks, but the SPX, NASDAQ and RUT generated "KEY" negative reversal weeks, having made new all-time intraweek highs and then closing below the previous week's lows. This was even more indicative, due to the fact that both of the important economic reports for the week (ISM and Jobs) came in better than expected, which were supposed to help the bulls take the indexes higher. As such, it can be said/thought that the action seen this past week was the beginning of a long-awaited correction. The Tech Industry led the way down, with the NASDAQ dropping 4.6% in value this week. The SPX dropping 2.7% and the DOW dropping .4% . The dichotomy between the DOW and the NASDAQ changed 4.2%, which is the biggest change seen in at least the last 3 years. This dichotomy is strongly indicative that the bull trend for the past 10 weeks has ended.
All indexes closed on or near the low of the week, suggesting further downside below last week's lows will be seen this week. In the DOW that is below 50867, in the SPX that is below 7368, in the NASDAQ that is below 28929 and in the RUT that is below 2819. Both the SPX and the NASDAQ have intraweek levels of support close by that will likely be trigger points for lower levels. Those are at 7333 and ad 28567 (respectively). Below those levels there is "no support" until 6996 and 25858 (on a weekly closing basis) are reached. If those levels are reached, it will mean that an 8.6% and a 17% correction (respectively) will have occurred. Such a correction is certainly within the norms of a normal correction.
One stock that should be closely watched this week is NVDA. What this stock does will strongly impact what the NASDAQ does this week. The stock closed on Friday at 205.10 and the previous all-time high weekly close was at 202.48. If the stock closes on Friday below that level, a failure signal against the bulls will be given, which in turn would open the door wide for the index to have the kind of correction that was stated above (17%). On the daily closing chart, the stock did generate a failure signal, given that the previous all-time high daily close was 206.68, meaning that level (on a daily closing basis) will be resistance every day of this week. To the downside and on the same daily closing basis, a close below 196.50 will trigger more selling interest.
In the SPX and using the daily closing chart, a close below 7353 will be a trigger point for more selling to occur. In the DOW that level is 50867, and given the dichotomy change, if both the DOW and the NASDAQ (at 28567) break their trigger points, there will be strong selling interest overall.
To the upside, here are the levels of daily close resistance, which if broken, would offer the bulls a chance to negate last week's negative chart action. In the DOW that is at 51307, in the SPX that is at 7501, in the NASDAQ that is at 29580, and in the RUT that is at 2845. Breakage of these levels does not guarantee that further upside will occur, but it will take away some of the chart ammunition that the bears gained this week.
Probabilities do favor the bears strongly though, and it would take some tangible good news (like the end of the Iran war) or the CPI and PPI numbers to be lower than anticipated (Core CPI expected at .3% and Core PPI at .4% on Wednesday and Thursday), to change the scenario and neither of those are likely to happen
