Stock Market Analysis: Major Market Reversal Patterns in Place – How Will This Impact Your Investments?
Last week was a rough one for stocks, with the S&P 500 down 2% and the Russell 2000 finishing almost 4% lower. The gamma squeeze seems to be over, leaving the market vulnerable as we head into earnings season. Companies’ guidance is crucial as estimates for 2024 are falling for the S&P 500 and the S&P 493. With weaker-than-expected earnings and sales surprises, there’s pressure on companies to deliver upbeat guidance.
Here’s a breakdown of key market indicators:
1. Russell 2000: The gamma squeeze has ended, with downside IV rising faster than upside IV. What’s next for small caps?
2. S&P 500: A bearish engulfing pattern on the weekly chart suggests a potential move lower. Fib relationships point to a possible correction.
3. Nasdaq 100: A completed ABC pattern and rising wedge signal potential downside for tech stocks.
4. Semiconductor Index: A breakdown below the broadening wedge pattern could lead to a 20% decline. Nvidia is at a critical support level.
5. S&P 500 Equal Weight: A 2B reversal top indicates a potential trend reversal. Will the RSP continue to underperform?
Understanding these market patterns can help investors make informed decisions about their portfolios. Keep a close eye on earnings reports and guidance to navigate the current market environment.