It’s another disappointing week in the market. All the key U.S. indices have recorded at least two weekly losses in a row.
You can expect this to happen after they reached their all-time highs recently.
Next, here are three things that push the market to slide downwards:
There were rumors that his actions were starting to shake the Republicans. If he lose support from them, it may be hard for him to push through his pro-growth agenda.
On a lighter note, North Korea decided not to launch their missiles towards Guam, a U.S. territory. That sent a sigh of relief for the investors.
The four indices above are in the red marks for the week. Russell 2000 is the worst performer with -1.2% loss. Because of this event, the indices see lower annual returns for 2017. Only Nasdaq still show double-digit gains this year.
Dow Jones gave back all her returns made since end of July 2017. It bounced to recover from the initial slump but it met with hard plunges in the last two days. See if it can stay above the imaginary support line at 21,600 and the rising 50DMA line.
It seems like Nasdaq will be consolidating for a while based on the price actions above. The index pierced through the flat 50DMA support line twice in the space of two weeks. It also slide through the old support at 6250 twice. See if it can stay above 6100 in the next several weeks
S&P 500 also crashed through the rising 50DMA line at high selling volumes. Another caution is this is also the sixth loss in a matter of two weeks. See if the index can come to a halt and bottom somewhere at 240.
Russell 2000 is behaving wild and loose in the last three weeks. With price drops as large as 1-2%, it's no wonder that the index is the laggard. One evidence is that it pierced through the 50DMA and the 200DMA at strong volumes (see red arrow). This usually indicates that it is ready for bearish run unless it can bounce and reverse its downward momentum.
In the weekly chart, Dow Jones showed no red flags yet. Based on the dotted line, the long term trend is still heading up. Although there are two consecutive weekly losses, it seems like a healthy price pullback. This is to shake off weak investors/traders. Volumes in the last two weeks are also low and dry.
Similar to Dow Jones, the chart above shows that Nasdaq is simply retracing to the imaginary long term trend line. Another positive sign is that the weekly selling volumes in the last four weeks are declining and drying up to. This shows that investors are no longer keen to unload its stocks in Nasdaq.
S&P 500 is showing steady rise since the start of 2016. Although there is a slight two weeks of decline, this doesn't warrant worry. Why? The 50WMA (intermediate term) and 200DWMA (long term) support line are still in an uptrend and rising.
Russell 2000 is back to where it was in late 2016. After several weeks of attempt to break the old resistance of 140, it is now sliding down for four consecutive weeks at increasing volumes. It is currently in a long range sideway motion. See if it can find support above the 50WMA line or the imaginary support at 132.
In this Fear & Greed Index, the indicator shows that the arrow is pointing more towards the left. In fact, the index has dropped from 25 to 17 in just one week. This action says that more investor are fearful of the current market settings. Another 'fun' fact is that many of them were in 'greedy' mode a month ago. That shows how dynamic a human emotions can be when it comes stock market. We're an irrational creatures!
Before signing off, continue to stay on your toes.
When the market is pulling back, it is time to refresh your watch lists. See which stocks are holding up well when most others are selling off.
This period might be another buy-dip opportunity. If things turn out well, buy these leading stocks that resist downward motion.
But if it becomes severe, keep your losses small and stay on the sidelines.