Yesterday’s weak finish set a precendent as to what to expect today. Premarket action had offered some cause for optimism, but strong economic data sent markets packing and it will take something substantial to get out of current trading ranges.The Russell 2000 (IWM) still very much is working off its Christmas hangover. The sizable red candlestick casts a substantial gloom on the index. We just missed a test of the 200-day MA in September, and it’s just hard to see any recovery coming without a test of this moving average. But even here, it might not be enough. The last big push below its 200-day MA was in October 2023 and another such move in 2025 would offer short term pain, but be good in the long term.
The S&P had a Santa rally that clawed back the losses of the big red candlestick, but it wasn’t enough to challenge the “bull trap”. Today, we saw a sell-off triggered by supply at the S&P’s 20-day MA. We may yet see buyers try to defend the December swing low, but it will need a large does of positivity to get the index back above its 20-day MA. Like with the Russell 2000, the 200-day MA beckons. It’s last major dip below this moving average was in May 2022.
The Nasdaq is only the index hanging on to net bullish technicals. However, it’s also the index with the clearest break-and-tag of resistance. There is stil a decent area of support around 19,350 to work off, with the 50-day MA also nearby to lend a hand. If looking for a longside opportunity (risky though that is), this is probably the best index to try. Although you would also have to overlook the substantial bearish distribution day.
Joining the Nasdaq in the resistance tag-and-go is the Semiconductor Index (SOX). It has really been pegged by former support – turned resistance – since November. Technicals are net positive, but how long can these hold on?.
Bears might find more joy with the Dow Jones Industrial Average. It’s already toying with November lows with a bearish cross between 20-day and 50-day MAs. Volume climbed to register as distribution.For tomorrow, watch for breaks of December lows in the Dow Industrial Average and/or Russell 2000 (IWM). If there is a chance for a bounce, the Nasdaq is the best opportunity, but don’t be wed to it.More By This Author:Looking Ahead To 2025; 12 Charts To Track
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