Sluggish Week Has Market Bulls Facing First Test of 2019
A sell-off has left the U.S. stock market on track for a three-day losing streak, posing the first big test for market bulls in 2019 says Mott Capital’s Michael Kramer.
Mott Capital’s Michael Kramer said Thursday’s trading action demonstrated the stock market’s resilience as major indexes managed to hold at or above key technical support, but a trade beneath those levels on Friday could be a sign that at least a short-term reversal may be at hand.
“Yesterday, many of the major indexes tested key levels of support and resistance, held firm and recovered from those losses. The S&P 500 has seen 2,690 act a major level of support and resistance on several occasions since May,” Kramer told MarketWatch in emailed comments.
The S&P 500 index SPX, -0.39% was trading right at around 2,690, down 0.6% for the day. Meanwhile, the Dow Jones Industrial Average DJIA, -0.66% was off nearly 200 points, or 0.8%, slipping back below 25,000, while the Nasdaq Composite Index COMP, -0.23% was off 0.6% at 7,247.
The S&P snapped a five-day winning streak on Wednesday and is on track for a 0.5% weekly decline. The S&P 500 is on track for a 0.5% weekly decline but remains up around 7.4% year to date and around 14.5% from its Christmas Eve low of 2,351.10.
Kramer also says that the Cboe Volatility Index VIX, +1.41% or VIX, needs to hold below 18, a point that has represented a level of resistance for the gauge. The VIX, often referred to as Wall Street’s “fear gauge, traded at 17.38 on Friday. It measures trader expectations for volatility over the coming 30-day period and tends to rise as expectations for declines grow.