Despite a good Jobs Report pre-market, equities got off to a bad start on Friday. There were mixed earnings reports, a Report detailing corruption at the highest levels of government, and rising interest rates on Friday, all of which may have had an impact on market direction. The selling was fierce and by noon seemed to level off, only to pick-up and fall heavily into the close. By the final bell, the major indices suffered their worst day in years. At the close, the DJIA was down 2.5%, the SPX fell 2.1%, and the NDX lost 2%. Breadth was decidedly negative, 9 to 1, on above average volume. RSI’s fell, with all three major indices now in the 40’s. MACD’s are below signal for all three major indices. ROC(10)’s also moved into negative territory. For the week: DJIA down 4.1%, the NDX lost 3.7%, and the SPX falling 3.8%. The VIX spiked on Friday and is up 56% for the week to 17.31. Volatility is now coming back into the market. It will be a fairly light week for economic reports, but earnings reports continue.
Long term, the upside bias continues. Despite last week’s losses, the major averages remain in positive territory for the year. YTD, the DJIA is up 3.2%, NDX up 5.6% and the SPX gaining 3.3%. They also remain well above their 150D-SMA’s: DJIA-23243, SPX-2573, NDX-6181. Short term, the major averages are approaching their 50D-SMA support levels of: DJIA- 25016, SPX-2715, NDX-6578. A break below the 50D-SMA and we may be looking at a more serious correction. Near term, technicals have broken down and we may see more selling. The DJIA and SPX have broken the 50% retracement level of the last upside leg, which began on Jan.1. The NDX remains slightly above this level. Europe is lower in early trade. US Futures are pointing significantly lower pre-market.
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