I hope you are all having a great weekend so far!
I looked over the 2000 and 2008 market crashes and found something in common with their charts. The major indexes failed to make new highs for an extended period of time, like a few months, and then proceeded to break a key support level. The “crashes” were all very slow grinds downwards, and the charts gave lots of warning signs.
I will show you the key support levels on the major indexes below.
If QQQ breaks below 155 on a weekly close, this raises some concern for the bulls. If we close below 150 on the weekly chart, I expect an additional 10% drop within the next few months. Also, the MACD indicator will flash a sell signal if the lines cross below the middle 0 line. We are still far above 0 right now, so there’s no reason to doubt the uptrend if we look at the chart alone.
Here’s the SPY with the support level in the 250-260 range. I suspect that if we test the bottom area of the range again, we will probably break down below it. Watch out below if the SPY closes below 250 on the weekly chart.
The DIA has a support zone from 230-240 on the weekly chart. Again, a close below 230 would signal a lot more downside.
See you Tuesday!