It is hard to believe the S&P 500 reached its all-time high on February 19, only 14 trading days ago. Since then, the index has traded lower in 10 of those 14 sessions, though today, it bounced exactly where expected—at the 10% correction level and the first key Fibonacci support (see highlighted purple boxes in the table below).

Nasdaq Doji Candlestick
Also of note is today’s Doji candlestick in the Nasdaq composite. Today’s long lower wick indicates that sellers initially drove prices down, but buyers later stepped in to push the price back up to close near the opening level. This suggests that bearish momentum may be waning, and a potential reversal or consolidation phase could be forthcoming.

However, market liquidity remains weak, and price action has been poor.

That said, stocks are deeply oversold, and if a tradable bounce materializes, the first key resistance is today’s high at 5636.30, followed by Monday’s high at 5705.37. A breakout above these levels could bring the 200-day moving average at 5738.94 into play.

RSI Below 30
The S&Ps Relative Strength Index (RSI) closed at 28.35 today.  When an asset is oversold (RSI < 30), it often indicates that the selling pressure has been excessive, and a reversal or bounce could be near.  However, oversold conditions don’t guarantee an immediate reversal. The market could continue moving lower in the short term if there are strong fundamental pressures, which, given the policy lunacy in Washington, is certainly the case.  

Downside Support Levels
On the downside, today’s low at 5528.41 serves as immediate support. Below that, an “air pocket” could accelerate selling toward the thin support line at 5400 and the next Fibonacci support at 5132.90.

A full 20% correction at 4917.94 would officially mark bear market territory, which we believe is much more likely than what the market expects.  

Staying cautious, keeping risk controls in place, and looking to sell at higher levels.