February Lows Undercut - New Lows Beckon

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Friday saw the end of support from the February and March swing lows, as sellers closed the week in total control. We now have to consider the possibility of a measured move lower. Some indices are closer to this target than others.

The nearest measured move target is the S&P 500. Its target is the 3,977 level. It would take only one or two days' worth of selling to get there; this level was formerly resistance in January 2021, and it now has the potential to be support. On the weekly chart, momentum is not entirely oversold, and I would ideally like to see it tag a level last seen in March 2020.  

The Nasdaq has long since kissed 2021 support levels goodbye, and it now has the swing lows of summer 2020 for its measured move target of 10,820. Given the extent of these losses, the index has already reached a level of momentum beyond the oversold state of 2020's COVID-19 lows.

What we are seeing is a long-needed counter move lower in the indices -- something more substantial than the swift move down that we saw when COVID-19 first emerged in 2020.

The Russell 2000 had been slowly building a solid base, and it had managed a breakout before quickly reversing as a 'bull trap.' These 'bull traps' commonly return to support of the prior base -- and then break it -- and this was no exception.

In this case, the measured move target is down to the January 2020 pre-COVID-19 highs of $166, which would be an ideal buying point given the already oversold state of the index. 

On a positive note, investors should be buying instead of selling into fear when markets are trading at the levels they currently are now. Prices have a good chance of going lower, but there is already accumulation value to be had here -- the key is spreading out the investment, perhaps over a period of six months.

I have tracked sample trades here, but I would be expecting to see stop hits for each at this point. However, my ROTH investments continue to do well.