Written by Lance Roberts, Clarity Financial
— this post authored by Jesse Colombo
Here are the key U.S. stock charts to watch in the week ahead.
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After breaking below the two most recent uptrend lines in early-February, the S&p 500 attempted to regain one of the trendlines earlier this week, but was unsuccessful and has fallen quite hard in the last several days. The market is currently bouncing around in between the most recent broken trendline and the longer-term trendline that is approximately 150 points below the current price. If the sell-off continues, this is the next most important price target and support level to watch which is currently at ~2,570.
The daily Nasdaq Composite Index chart shows that the tech-heavy index is in a stronger technical position than the more industrially-oriented Dow and SP500. Though the Nasdaq broke below its most recent uptrend line in early-February, it was able to regain this level and has successfully remained above it despite a brief breakdown attempt on Thursday and Friday.
The small-cap Russell 2000 index is in the weakest technical position of all the major U.S. stock indices. The early-February market correction caused the Russell to slice below its uptrend line that started in August 2017, but it has been unable to regain this level despite the slight rebound that occurred in mid-February.
The weekly S&P 500 broke below its August 2017 uptrend line in early-February and has been unable to regain this level. If the sell-off continues, the uptrend line that began in early-2016 is the most important support level and price target to watch. If that level breaks in the future, it would be very worrisome.
The Nasdaq Composite remains above all of its major uptrend lines on the weekly chart, which confirms its relatively strong technical position. If the index breaks below these uptrend lines, however, the technical picture would become much more bearish.
Despite the Russell 2000’s weak chart on the daily timescale, its weekly chart looks much stronger. The small-cap index is still trading in a clear channel pattern and the uptrend remains intact as long as it remains within this channel. If, however, the Russell breaks below this channel in the future, it would give a bearish technical signal.
