Investment Manager Reveals 7 Key Indicators to Watch After Market Plunge
Yesterday, the stock market experienced a sharp decline, with the S&P 500 down over 2% and the Nasdaq dropping 3.15%. While this drop was somewhat expected, it was fueled in part by a surge at the end of the day on Friday, driven by a buy imbalance as the month came to a close.
By mid-morning, the S&P 500 had wiped out all of Friday’s gains, creating a significant gap from a bullish perspective that may be filled quickly. If you’re bearish on the market, caution is advised due to the straight-line drop at the open following Friday’s rally.
Here are 7 key indicators to keep an eye on as the market prepares for potential volatility following yesterday’s declines:
1. S&P 500 Gap Fill at 5,450: A gap below 5,500 could lead to a gap fill at 5,450, opening the door to various outcomes.
2. Nasdaq 100 Support Levels Break: The Nasdaq 100 has broken through several support levels, making it appear weaker compared to the S&P 500.
3. Nvidia’s Bearish Diamond Reversal Pattern: Nvidia is showing signs of completing a bearish diamond reversal pattern, with potential for further decline.
4. Broadcom’s Earnings Drop: Broadcom’s drop ahead of earnings is concerning, especially as it has broken a support level.
5. High Yield Bonds Impact: The CDX high yield spread index was higher, impacting small-cap stocks like the IWM.
6. USD/CAD Correlation: The USD/CAD’s movement can signal changes in the S&P 500, with a strong inverse relationship.
7. S&P 500 Futures Volume: Contract volume surged, indicating potential shifts in market sentiment.
In summary, it’s crucial to monitor these indicators closely as the market navigates potential volatility. Understanding these signals can help investors make informed decisions and protect their portfolios during uncertain times. Stay informed, stay vigilant, and stay ahead of the market trends for a successful investment strategy.