The selloff in the last two weeks has outweighed the gains from the two weeks before. The S&P 500 is now down 0.6% on the month, following an over 2% drop yesterday. Tech shares are bearing the brunt of those declines, with the Nasdaq seeing its worst daily showing since November 2022. So, where does this leave us on the chart?
The drop yesterday came after underwhelming earnings from Tesla and Alphabet. The latter saw a beat on earnings but there are warning signs building towards the coming quarters. And that set off a sour mood as investors are worried about how the rest of the Magnificent Seven will be reporting.
Anyway, the daily chart above sees the S&P 500 now fall back to test key trendline support from its uptrend since November last year. That is a key level to watch for any potential bounce back in the near-term. Otherwise, a break below that could set off a push back towards the 100-day moving average (red line) at least. And that level is seen just under 5,300 for now.
It's not just US stocks that are squaring off against a key technical situation. In Europe, the French CAC 40 index also dropped to test the lower bound of its recent range yesterday:
French stocks have been the laggard in Europe, following the results of the recent election. And we're now seeing stocks pushed to the brink of key support from last month. A break below that will draw focus to the January low of 7,281 next potentially.
Looking at the overall picture, the losses this month haven't been too deeply felt for US stocks in particular. But as noted above, a break in the momentum could be something to set off a further retracement before we get to the next leg higher again.
