After flirting around 1850 support/resistance level for 6 weeks, S&P 500 index finally given up and dragged down by sell-off in momentum stocks. S&P 500 index closed at 1815, down 2.65%, Dow Jones Industrial Average lost 2.35%, while Nasdaq composite decreased 3.1% for the week.
Weekly chart shows that S&P 500 index is right above its 28 moving average trend line after giving up 1850 level. In the past year, the index has bounced right off the support 4 times to maintain the up tend, and we will see how it reacts this time in the next couple of weeks. However, following the discussion last week, the technology laden Nasdaq composite has not fared well with the support level this time. The index broke and closed below the support for the first time since beginning of 2013. This signals a trend change for Nasdaq composite index, and I am afraid that it will propagate to broader market and affect the S&P 500 index. The next support levels for Nasdaq composite index are 3900 and 3600 and 1715 and 1610 for S&P 500 index.
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| Weekly chart of S&P 500 index |
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| Weekly chart of Nasdaq composite Index |
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