Market Closes Red After Slow Week

Market Closes Red After Slow Week

Overnight, the S&P 500 futures broke below the pivotal level of 4,100. This 4,100 level was described as the line in the sand and would be used to gauge sentiment for the day. As the cash session approached, several early rejections of the level confirmed market sentiment into the opening bell.

As the opening bell sounded, another cover sent the market toward the 4,100 resistance level. At this time, all indexes began to roll over ahead of the University of Michigan (Umich) Consumer Sentiment Index report at 10 a.m. Eastern. When the information was released, data revealed consumer sentiment was higher than projected. The median forecast for the report was 65.1, and the actual data was 66.4. Although this was not an extensive beat, consumer sentiment continues to rise as market conditions appear to improve slowly. 

For the rest of the trading session, a very volatile range bound chop occurred between the 4,100 level and the 21-day exponential moving average (EMA) at 4,070. 

Pivotal Point In the Markets

There are several ways to look at this action to end the week. On the one hand, the market has had a healthy pullback and has been able to hold the 21-day EMA. In most cases, this is what a healthy pullback in a larger picture uptrend looks like. 

Conversely, there have been consistently lower highs seen throughout the market since putting in the recent higher over a week ago. In the micro, a clear downtrend is being established, with many key levels being lost along the way. The market is now at its last line in the sand to hold the macro uptrend (21-day EMA). Add in the weakness being developed in some technology names and the inability of the market to reclaim 4,100 in today’s session, and you also have a valid bear case. 

Both cases are likely true, and events next week will look to extrapolate the bull or bear case, and a significant move in the market awaits. 

Looking Into Next Week

The most significant event to be aware of next week will be the U.S. Consumer Price Index (CPI) report at 8:30 a.m. Tuesday. Core CPI (year-over-year) has a median forecast of 6.2%, which is lower than the previous 6.5%. Another report that yields better-than-expected numbers can send the market soaring as the S&P 500 futures continue to hold the 21-day EMA. If the data comes in hotter than expected, it could finally be the straw that breaks the camel’s back, sending the market lower. 

On Wednesday, retail sales will also be released at 8:30 a.m. Eastern. Retail sales is a report that helps give forward guidance on how much consumers are spending. If retail sales continue to rise, it would be an early indication that consumers are gaining confidence in the market sentiment. 

On Thursday, the weekly Continuing and Initial Jobless Claims data will be released at 8:30 a.m. Eastern. The past several weeks have shown a labor market that has been surprising, with an extremely high reading a couple of weeks ago. Markets will look for the labor market to stabilize to show signs of layoffs declining or continuing to rise at a steady pace to indicate a slow layoff period. 

Market Slides Sideways Into Close

The Nasdaq closes negatively as the S&P 500 fights to close the session positively. The S&P 500 futures closed up 0.15%, adding 6 points, while the Nasdaq futures closed down 0.69%, falling 86 points. The Dow Jones futures followed, closing down 0.68%, a loss of 85 points.