• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Stock Market Indexes Plunge After Hitting Resistance — Support Levels You Need to Watch
Stock

Stock Market Indexes Plunge After Hitting Resistance — Support Levels You Need to Watch

by April 12, 2024
by April 12, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Now that earnings season has begun, what can you expect the stock market to do, especially after its stellar Q1 run? Well, after a few months singing the monotone “up, up, up” tune, the stock market has mixed things up a little. Now you hear “up, down, up, down.”

Why the Change?

A hotter-than-expected CPI number sent the stock market into a selling frenzy, but the PPI, which came in slightly lower than estimates, reversed things slightly. However, the selling pressure returned on Friday, with the broader indexes closing lower.

Earnings season kicked off with JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) beating estimates. Yet their share prices fell, mainly due to lower-than-expected interest income. The CEO of JPMorgan Chase, Jamie Dimon, made comments concerning inflation further worried investors. In addition, the elevated concerns of geopolitical tensions made investors jittery, resulting in the selloff the stock market witnessed this week. The CBOE Volatility Index ($VIX), considered a fear gauge, spiked above 18 during the trading day, but closed at a lower level.

Dow Jones Industrial Average Analysis

The daily chart of the Dow Jones Industrial Average ($INDU) below shows the index retreating after hitting a high in April, at around the same level as the high in March. This reversal happened relatively quickly. In this scenario, it helps to sit back, analyze the chart, and add your lines in the sand.

CHART 1. DAILY CHART OF THE DOW JONES INDUSTRIAL AVERAGE. After hitting a high, the index pulled back, fell below its 50-day simple moving average (SMA), and is now close to its 100-day SMA.Chart source: StockCharts.com. For educational purposes.

First, look for stand-out support levels—previous highs, price gaps, and lows. In the above chart, it’s clear the series of higher highs was broken, and the index now displays lower highs.

After breaking below its February low, the next support level would be the late December high (red-dashed line). Similarly, you can identify various support levels and draw them in your chart (red dashed line at around 35,600). 

Another way to identify support and resistance is to add Fibonacci retracement levels. In the daily chart of $INDU, Fibonacci retracement levels were drawn from the October low to the March/April high. 

How do you add trendlines in StockCharts? 

Select the Annotate button > Line tools icon > Trendline.Watch this tutorial!

How do you add Fibonacci retracement levels in StockCharts?

Select the Annotate button > Line Study icon > Fibonacci Retracement

Moving averages help identify the overall trend. In the daily chart of $INDU, the index is below its 50-day simple moving average (SMA) and is trying to hold on to the support of its 100-day SMA. The S&P 500 is at its 50-day SMA.

A Longer-Term Perspective

The weekly Dow Jones chart gives a big-picture view of the index (see chart below). While the Dow is still above its 50-week SMA, the last two weeks have seen a significant selloff. But it’s less than a 5% correction. Next week should be interesting, with the S&P 500 and Dow Jones at critical support levels at the end of this trading week. The market has gone through some minor dips lately, but, if the indexes fall below significant support levels, the correction could be extended.

CHART 2. WEEKLY CHART OF DOW JONES INDUSTRIAL AVERAGE. The index is below its 50-week SMA. Will it fall to its next support level?Chart source: StockCharts.com. For educational purposes.

While stocks have been selling off, commodities have risen since March, with gold hitting all-time highs and silver hitting a 52-week high. Energy prices have been rising, and the US dollar is edging higher. It’s too early to tell if investor sentiment is shifting, but it’s something to monitor closely.

What This Means For Your Investment Portfolio

A 5–10% correction isn’t something you should panic about. The stock market is overextended, and a pullback is long overdue. At times like this, you need to watch the market regularly.

A few actions you can take are as follows:

Add potential support levels to your charts and monitor them closely.Watch the S&P sectors and look to see which sectors are leading and lagging. Our Chief Market Strategist, David Keller, CMT, covers this in his show The Final Bar.Monitor price action in the commodity markets—gold, silver, and crude oil.

End-of-Week Wrap-Up

S&P 500 closes down 1.46% at 5,123.41, Dow Jones Industrial Average down 1.24% at 37,983; Nasdaq Composite down 1.62% at 16,175.09$VIX up 16.10% at 17.31Best performing sector for the week: TechnologyWorst performing sector for the week: FinancialTop 5 Large Cap SCTR stocks: MicroStrategy Inc. (MSTR); Coinbase Global Inc. (COIN); Super Micro Computer, Inc. (SMCI); Vistra Energy Corp. (VST); Vertiv Holdings (VRT)

On the Radar Next Week

March Industrial ProductionMarch Manufacturing ProductionMore Fed speeches Earnings from Goldman Sachs (GS), Bank of America (BAC), Morgan Stanley (MS), United Airlines (UAL), and Schlumberger (SLB)

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • These Groups Just Turned BULLISH!
  • How to Increase Your Win Rate
  • Mag 7 Stocks in the Spotlight as Stock Market Recovers
  • How to Spot the Early Signs of a Reversal Using ADX and DI Lines
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Using Outsized Moves to Identify Trend Reversals – Checking in on ITB and SOXX
next post
Mike Pence lands new gig after failed 2024 presidential bid

You may also like

Why this Hated Bull Market Keeps Rising; QQQ Recovers, Oil...

July 30, 2023

Stock Market Volatility: Pain Points, Bright Spots, and Strategies

April 10, 2025

Investors Continue To Believe

July 28, 2023

Mixed Signals on the Charts? RRG Reveals Market Rotation Tension

May 27, 2025

Small Caps Breaking Out BULLISH

March 8, 2024

Top AI Add On Plays After Nvidia’s Strong Earnings Report

May 25, 2023

Here’s My Most-Likely Scenario for QQQ

September 13, 2024

Week Ahead: NIFTY Stares At Crucial Support; RRG Hints At...

February 8, 2025

A Sector Rotation Dilemma …

September 20, 2024

Are You Ready for a Huge Selloff?

August 19, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Stock Market’s Spectacular Q3: Highest Sector...

    September 30, 2024

    Does “NoGo” for the S&P =...

    August 17, 2023

    Sector Spotlight: S&P 500 – Consumer...

    November 21, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here