The early enthusiasm in US stocks yesterday faded completely by the end of the day and that’s the second time this week that dip buyers have failed to muster a solid showing. That isn’t encouraging whatsoever in terms of sentiment and I fear the technicals are also hinting at a much steeper decline for equities in the sessions ahead.
As highlighted yesterday, the Nasdaq is in a really rough spot after price broke below both its key daily moving averages for the first time since the start of the pandemic. The drop continued as price is now rolling over to the October lows and a break below 14,000 could see downside accelerate further to the May or March lows next:
Adding to that, the S&P 500 also broke below its own 100-day moving average this week and looks headed for a test of its 200-day moving average @ 4,427.63 next. If that gives way, it will be a major technical blow and that could be a catalyst for a rather deep correction in equities that one can argue has been long overdue.