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March 10, 2022

Indices: New Lows Incoming

Frank Cabibi

A big red flag has entered the US stock market after giving back some of yesterday's gains. Indices are broadly down as the SPX500 is down over 1%. Something happened in the stock market that could lead the benchmarks to new lows.

Death Cross Pattern

new lows

The #1 concern for the SPX500 (US500) is the death cross formation that happened in the last trading session. The blue line is the 50-day moving average and the red line is the 200-day moving average. When the 50 crosses below the the 200, it suggests that a trend reversal is about to take place.

Jobless Claims

Additionally, the US saw an unexpected rise in jobless claims this week after two weeks of beating forecasts. The report missed by 11,000 claims which is likely one of the catalysts for today's drop. On top of record-high inflation from decades ago and failed ceasefire talks, indices look like they are in bad shape right now.

Trade Setups: Calling The New Lows

new lows

Recent behavior suggests an eventual move to a level under the $4000s. However, there is also a chance that price could come up to test the top of the trend line before then. Regardless, it looks like the market is looking for a bottom, but has yet to hit clean support which would be around the $3980-90s.

new lows

A zoomed out look on the 1D gives us a better idea of where we could find the SPX end up going if the sell off continues. On the other hand, commodities seem to be cooling off for the time being, and this has been good for equities traders.

Overall, indices look like they will end up moving to the downside, but there is a lot of noise in the way. Although the week could end with higher stock prices, there are more than enough reasons for SPX to hit lower lows.

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