The stock market pulled back on Wednesday after trading in a tight range following news President Trump would be addressing auto tariffs. After the close, he revealed he would be imposing 25% tariffs on all cars that are not made in the United States.
The Nasdaq tagged a low of 17,837 before settling at 17,899 (-2%). New support at 17,800 held. Resistance is once again at 18,000.
The S&P 500 was last seen at 5,712 (-1.1%) after hitting an intraday low of 5,694. Support at 5,700 was tripped but held. Resistance is at 5,750.
The Dow traded down to 42,326 while ending at 42,454 (-0.3%). Support at 42,500 failed to hold. Resistance is at 43,000.
<strong>Earnings and Economic News</strong>
Before the open: Bitfarms (BITF), Telesat (TSAT), Winnebago (WGO)
After the close: AAR (AIR), Barfresh Food Group (BRFH), Lululemon Athletica (LULU), Oxford Industries (OXM),
Economic news:
Initial Jobless Claims – 8:30am
Pending Home Sales – 10:00am
Wholesale Inventories – 10:00am
<strong>Technical Outlook and Market Thoughts </strong>
The biggest developments from Monday’s gap higher were that the major indexes cleared key resistance levels AND volatility collapsed. The action dramatically improved the technical outlook with the Dow and the S&P 500 clearing their 200-day moving averages.
Tuesday’s higher highs were also slightly bullish but the small-caps failed to join the party after stalling a half-point below Monday’s high. Wednesday’s overall weakness pushed fresh support levels that served as prior resistance with the back test being a normal process…as long as they hold.
The Russell 2000 settled at 2,073 and just below 2,075. This battle ground has been in play in five of the past eight sessions with weakness to 2,050-2,000 on continued closes below this level.
Resistance is at 2,100 following Monday’s close above this level and the double-top formed at 2,110 on Tuesday. More important hurdles remain at 2,135 and 2,200.
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The Nasdaq stalled at 18,281 on Tuesday after clearing and holding 18,000 on Monday. Key resistance at 18,500 and the 200-day moving average easily held. A close above these levels gets 18,750-19,000 and the 50-day moving average in focus.
New support at 17,800 held on Wednesday with backup at 17,500. The March 11th low kissed 17,238 and the March 13th bottom hit 17,239. A close below 17,250, or the aforementioned lows, would be a renewed bearish signal.
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The S&P topped out at 5,786 on Tuesday with lower resistance is at 5,800-5,850 holding. A move above the latter gets 5,900 and the 50-day moving average in the mix.
Key support is at 5,700. Multiple closes back below this level gets the prior 10-session trading range in play with risk down to 5,500. A move below 5,500 would be a bearish development for redness towards 5,400-5,200.
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The Dow made a higher high on Wednesday at 42,821 with lower resistance at 43,000-43,250 holding. A close above the latter and the 50-day moving average would be an ongoing bullish development.
Rising support is at 42,250-42,000. A move below the latter and the 200-day moving average would imply another near-term top.
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The Volatility Index (VIX) sank 9.3% on Monday to close below key support at 17.50 and the 50-day moving average. Tuesday’s drop below the 200-day moving average added to the bullish market thesis and was the first close below this level in five weeks.
Wednesday’s pop up to 19.07 held 20 and the 50-day moving average. The VIX could trade in a range between 17.50-20 into 1Q earnings season that starts in a few weeks with stretch to the upside or downside.
A close above 20-22.50 would be bearish for the market. Multiple closes below 17.50 keeps weakness towards 15 a good possibility and would be bullish for the major indexes.
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The action continues to be fast and volatile with the algorithms easily reacting to any tariff headlines or inflation news. The charts have provided incredible market clues as far as the near-term twists and turns that have also prepared us for the longer-term trends. The action in the VIX has been pinpoint, as well, and why we urge you to follow it daily.
