The S&P 500 has returned to breakout support, displaying no capitulation despite indications on the previous chart. Increased selling volume suggests distribution. While the technicals remain positive, the index’s performance is lagging compared to others. Any early morning selling could present an opportunity to buy near the 20-day MA.
The Nasdaq avoided the selling pressure that impacted the Russell 2000 and the S&P 500 to a lesser extent. Despite a minor loss yesterday, the Nasdaq remains comfortably above its support levels. While On-Balance-Volume shows fluctuations, other technical indicators are favorable, indicating that the Nasdaq is still in a bullish trend.
Delving into an intriguing observation, the S&P 500 equal weight ratio to $SPY has dropped below the levels seen during the 2009 financial crisis. While the significance of this remains uncertain as the S&P 500 itself hasn’t reached any capitulation point, it presents a potential long trade opportunity.
Looking ahead, observers suggest watching for the S&P 500 to maintain breakout support and leverage the potential offered by the low in the $RSP:$SPY ratio. While the Russell 2000 is expected to trade within a range in the upcoming days, providing limited guidance, the Nasdaq would need a significant downturn to shift from its current bullish trajectory. The day’s developments will shed more light on these dynamics.