Besides the Russell 2000 (IWM), the Nasdaq 100 (QQQ), S&P 500 (SPY) and Dow Jones Industrials (DIA) closed from Friday’s high, creating a decent reversal.
This put the four major stock indexes in an interesting position as they showed technical weakness before any news surfaced on the new South African variant.
While Monday’s resilience is impressive, the pullback from highs had the biggest impact on the Small Cap Index, so IWM is still below its 200-day moving average, confirming a distribution phase.
Although IWM appears weak, it enjoys major support from its general trading lineup which extends through 2021.
Nevertheless, one should not only be wary of the weakness of IWMs but also of other key indices.
The strongest index so far is the Nasdaq 100 (QQQ) which tested a significant resistance zone on Monday.
If QQQ is unable to erase and hold more than $ 400.99, it will look like a head and shoulders chart pointing to more weakness and downside potential.
While it seems unlikely that the QQQ will collapse, we need to stay focused on the technology-intensive index as it has been one of the strongest major indices of the pandemic.
If QQQ succeeds and shows further weakness, it could be a very bearish sign.
When it comes to the DIA, it has two main levels to clean and keep.
One is the 50-DMA at $ 352.10 and the other is the spread at $ 355.34.
On the flip side, the SPY needs to clear and hold over $ 470 as it has faced most of its resistance over the past 3 weeks of trading.
Therefore, watch QQQ to signal more strength on the upside, but keep an eye out for SPY, IWM and DIA as they have more resistance ahead which can ultimately push the market down if they fail. not to regain momentum.
Analysis and summary of stock ETF trading:
S&P 500 (SPY) 470 main air resistance.
Russell 2000 (IWM) Distribution phase confirmed with second close under 200-DMA.
Dow Jones Industrial (DIA) 352 resistance of 50-DMA.
Nasdaq (QQQ) Watch to close over 400.99.
KRE (Regional banks) 71.17 supports 50-DMA.
SMH (Semiconductors) 314 next resistance zone.
IYT (Transport) 273.72 gap to be filled.
IBB (Biotechnology) I like to see this hold on 10-DMA at 154.06.
XRT (Retail) assistance zone 95.94.
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