Mounting Evidence August Pullback Was a Blip on the Radar
Nasdaq August expiration week was not friendly to bulls, as the S&P 500 Index (SPX 4,369.71) experienced its third consecutive week of declines, moving below the popular 50-day moving average and the bottom rail of a potential channel drawn from the March low. I am suspicious of technical breakdowns during expiration week, as delta-hedging declines have everything to do with positioning in the options market and little to nothing to do with technical support levelsif the broader market is unable to recover significantly in the next few days, one should put more weight in the technical breakdownAt risk of continually drawing lines in the sand as the SPX declines, an encouraging development was Friday mornings low at the 80-day moving average
- Monday Morning Outlook, August 21, 2023
With two weeks passing by since I posted the Aug. 21 market commentary, the remarks proved to be quite timely in their implications. First, during August standard expiration week, the S&P 500 Index (SPX 4,515.77) did experience a short-term and intermediate-term technical breakdown when moving below: 1) its July 2023 prior month low, 2) its 50-day moving average, 3) 4,475, or double the 2020 closing low, and 4) the bottom rail of an extended trendline connecting the March and May low points.
