The sell-off continued to gain momentum this week as the S&P 500 broke below the 200-day moving average. Similar to last week, we saw an early attempt to bounce from the 200-day, but the move was shallow and short-lived.
The remainder of the week trended lower, with Thursday marking the first decisive break of the 200-day since the tariff-driven sell-off last year, followed by further selling pressure on Friday accompanied by a noticeable increase in volume.
Price is now trading below all major moving averages. The 10, 21, 50, and 100-day moving averages are all sloping downward, while the 150-day is flat and the 200-day is beginning to flatten.
The Nasdaq (QQQ) showed even weaker behaviour, with little meaningful bounce early in the week. Any attempt to move higher was met with selling pressure, reflected in small-bodied candles with upper wicks.
Like the S&P 500, QQQ broke below the 200-day moving average on Thursday and continued lower into Friday, with volume picking up. Price is now well below the 200-day, with 10, 21, 50, and 100-day moving averages trending lower, while the 150- and 200-day moving averages are flattening. The 50-day has also crossed below the 100-day, reinforcing the deterioration in trend.
The Russell 2000 (IWM) also failed to show any meaningful bounce this week. Price action was characterised by weak candles and consistent rejection on any attempt to move higher, followed by a gradual decline throughout the week.
Price has now broken below the 150-day moving average and is currently testing the 200-day moving average.
Themes in Play
This week saw breakdowns across a number of sectors, and as a result I’ve reduced the number of themes tracked here. I will continue monitoring broader sectors, but will focus this section on areas that still show constructive structure or relative strength.
IBLC
Attempted a breakout earlier in the week but failed in line with broader market weakness. Despite this, the structure remains constructive, with higher lows and tightening price action. If market conditions improve, this could become an area of interest.
SMH
Remains within a constructive base and has held up relatively well compared to the indices. Notably, it appears to have formed a higher low compared to prior weeks. I will be watching to see if this level holds and whether the sector can stabilise. There are also several strong individual names within this theme.
CLOU / IHAK
Currently consolidating in a tight range following an extension down. While the sector has been weak overall, it is beginning to show relative strength versus the indices. A number of individual names are also displaying constructive behaviour.
UFO
Attempted a breakout on Tuesday but pulled back with the broader market, finishing the week near where it began. The sector continues to build a constructive base.
TAN
Attempted to continue its strength early in the week but ultimately sold off alongside the broader market. Still appears to be forming a longer-term constructive base.
Stocks Displaying Strength
As the sell-off accelerates, tracking stocks that exhibit relative strength becomes increasingly important. These names often emerge as leaders once market conditions stabilise.
Semiconductors / AI
While the broader theme ETF remains in a base, several individual names are showing resilience:
- LWLG – Posted a ~40% move on the highest volume in its history and is now consolidating around the 10-day moving average.
- MU – Pulling back toward the 10- and 21-day moving averages following a strong move off the 50-day in prior weeks.
- WDC – Similar to MU, rallied strongly from the 50-day and is now retracing toward shorter-term support.
- SNDK – Pulling back to the 10-day after a strong run, while continuing to hold short-term moving averages — a sign of underlying strength.
- AAOI – Strong earnings-driven gap last month with solid follow-through. Currently forming a base around the 10- and 21-day moving averages. Attempted to move higher on Thursday before pulling back on Friday. Could present a constructive setup in the coming weeks.
Cybersecurity / Cloud
- FSLY – Continues to trend higher but is extended in the short term. A pullback would improve the structure.
- YOU – Large earnings gap in late February, with gains well maintained. Currently consolidating around the 10-day moving average and may offer an entry if the market stabilises.
- WIX – Similar to YOU, with a strong earnings gap in early March followed by tight consolidation around the 10-day. Could see expansion if conditions improve, though overhead supply remains a factor due to its longer-term downtrend.
- DOCN – Up over 60% since early March. Currently extended, but worth monitoring for future setups following consolidation.
Other
- ISSC – Consolidating after a strong move, though still somewhat extended from the 21-day.
- CRCL – Pulling back toward the 10-day moving average after a strong run. Has given back very little of its gains and could continue higher if the market finds support.
- ALTO – Pulling back toward the 10-day after a sharp move. Still extended in the short term, but could present an opportunity once the 21-day catches up with further consolidation.
Key Observations & Focus for the Week
This week marked a clear increase in selling pressure across the indices. Both the S&P 500 and Nasdaq have now broken decisively below the 200-day moving average, with the Russell 2000 not far behind.
Additionally, the shallower bounce compared to the previous week suggests declining buyer interest. Selling is now broad-based, with most sectors participating in the move lower and no clear leadership emerging.
Overall, the current environment increasingly resembles the early stages of a broader market downtrend.
Given the recent price action, continued downside in the near term appears more likely. That said, markets rarely move in a straight line, and a relief bounce is inevitable at some point.
The key uncertainty is timing — whether we see an early attempt to reclaim the 200-day, or a further leg lower before any meaningful bounce develops.
My primary focus will be:
- Tracking relative strength names for potential opportunities when a bounce occurs
- Monitoring how any bounce behaves — whether it is sold into (suggesting continuation lower) or supported (suggesting a potential higher low)
Focus for the Week
This week, the focus remains on relative strength and preparation, rather than aggressive positioning.
Key areas of interest:
- SMH & CLOU / IHAK – Monitoring for continued relative strength
- IBLC – Watching for a potential breakout from its tightening structure