The S&P 500 follows through to the downside as market bounce was not enough to get above key moving averages (MAs). Monday saw a huge bounce to close just shy of prior long term support. As I suspected, prior long term support now seems to be acting as a resistance area as price was unable to reclaim this level.
Thursday marked a clear follow-through day to the downside, with additional selling pressure continuing into Friday. Price now sits just above the 200 day MA, while the 10, 21, 50, and 100 day MAs are all sloping downward.
The Nasdaq (QQQ) experienced similar price action, with a strong bounce on Monday followed by a sharp sell-off on Thursday and Friday that pushed the index below long-term support.
Price currently remains above the 200 day MA, but below all shorter-term averages. The 10, 21, 50, and 100 day MAs are all trending lower. Notably, the 50 day and 100 day MAs have crossed, which often signals deteriorating market conditions.
The Russell 2000 (IWM) spent the first half of the week attempting to reclaim the 100 day MA, but late-week selling pushed it back toward the 150 day MA.
Price now sits just below the 150 day MA, beneath declining 10 and 21 day MAs, while the 50 and 100 day averages remain relatively flat.
Themes
Gold/Silver
Both metals were relatively flat for most of the week before experiencing a gradual sell-off late in the week. Overall, both remain within constructive bases, and I will continue monitoring them for potential setups as these bases develop.
Solar (TAN)
Solar showed notable relative strength this week. After a strong bounce on Monday, the sector maintained much of those gains despite the broader market selling off later in the week. If market conditions stabilise, this area could present constructive setups.
Blockchain (IBLC)
Although still in a broader downtrend, IBLC appears to be forming a constructive base with multiple higher lows and tightening price action. This sector is known for producing sharp moves, and if the market environment improves, it could be worth watching for a breakout from this consolidation.
Semiconductors (SMH)
Semiconductors bounced strongly on Monday along with the broader market but failed to see meaningful follow-through. The sector sold off later in the week, though it managed to retain roughly half of Monday’s gains.
Price currently sits just below the 50 day MA. The base still appears constructive relative to the indices, but I will wait for further tightening before considering any setups.
Lithium (LIT)
Lithium displayed similar price action to SMH — a solid bounce early in the week followed by a late-week pullback. Price has held slightly more than half of Monday’s rally. The sector remains relatively stable but continues to form a longer-term base, so no immediate setups stand out.
Aerospace/Defence (ITA)
Defense stocks were relatively weak this week, selling off sharply on Thursday and Friday to close below the 50 day MA. Given the steap selloff, if the market stages a bounce, this area could offer short-term oversold reversal opportunities.
Satelite/Space (UFO)
Space stocks held up very well relative to the broader market and remained largely unaffected by the late-week sell-off.
Price is currently consolidating around the 10, 21, and 50 MAs while forming higher lows and tightening price action. This structure could present opportunities if price expands from the pattern.
Rare earths (REMX)
Rare earths sold off heavily on Thursday and Friday, giving back most of the gains from the previous week’s breakout. While price is still holding the 50 day MA, the sector is not currently an area of interest until the structure improves.
Uranium/Nuclear (URA/NLR)
Nuclear names have now lost the 10, 21, 50, and 100 day MAs and are currently trading between the 100 and 150 day averages. This sector can change character quickly, but it is not an area of focus at the moment.
OIL
Oil continues to trend higher amid ongoing geopolitical uncertainty. There appeared to be a potential entry on Wednesday, though the broader market environment makes chasing strength here risky.
Price is currently extended, and if geopolitical tensions ease, the sector could eventually present short opportunities — though these would carry significant risk.
Stocks displaying strength
ALTO
ALTO surged roughly 55% on the highest volume in its history and has since advanced another ~16%. Notably, the stock showed little reaction to last week’s broader market sell-off. I will be monitoring for potential pullback entries if the stock begins forming a tighter consolidation.
CRCL
CRCL gapped up 35% on strong volume on February 25th, breaking out from the lows of its IPO base. Since then, it has advanced nearly 40% and, like ALTO, has shown minimal weakness during the broader market decline.
Key Observations & Focus for the week
This week we saw the first signs of conviction in a move lower. All key indices are now trending lower, Thursday and Friday saw indices close at the lows with wicks to the upside and shorter term MAs now sloping down. Last week, I had mentioned that it would be vital to watch how a market bounce to assess what degree sellers are in control, and with how it played out, it seems that a continued sell off is seeming like the more likely scenario at this time. If we do get a continued sell off, I feel we will likely see support around the 200 day MA, at which point I will be looking for another bounce to trade.
This week showed the first real signs of conviction to the downside. All major indices are now trending lower, with Thursday and Friday closing near the lows of the day and forming candles with upper wicks. In addition, shorter-term moving averages have begun to slope downward.
Last week I noted that the market bounce would provide insight into the degree of seller control. Based on how that bounce failed and quickly reversed, continued downside currently appears to be the more likely scenario.
If selling pressure continues, I believe the 200 day MA will likely act as the next significant support level. Should price stabilise there, I will be watching for another tradable bounce.
That said, market sentiment remains highly sensitive to geopolitical developments. A single headline related to the Iran conflict could quickly shift sentiment, and given Monday’s sharp rally, another test of prior support (now resistance) cannot be ruled out.
For this reason, I am not looking to become aggressively short at this stage.
Focus for the Week
For now, my primary focus remains short-term long opportunities during market bounces.
Stocks and areas I am monitoring include:
- UFO – watching for expansion from the current tight consolidation. Specifically monitoring GILT above $17.30.
- TAN – looking for continued relative strength. Watching TE for a move above $8.
- ALTO / CRCL – monitoring for tight consolidation patterns that could offer lower-risk entries.
- ITA – Looking for a broader sector extension reversal bounce, watching KRMN for a move above $104.75.
Given the current uncertainty, patience and selectivity remain essential.