After six weeks where equities pretty much did nothing but trade higher. the last two trading days have served as a reminder to investors that stocks do in fact move in both directions. The fact that these two down days have come right at the beginning of what has historically been one of the better months of the year has some already wondering if Christmas will be canceled this year. However, while equities are down over the last two trading days, we have yet to see much in the way of technical damage in the charts.

Starting with the S&P 500, the US benchmark is still 1.8% above its 50-day moving average (DMA), which also happens to be right around the level that marks the breakout point from its July and September highs. Going forward, the key level to watch for the S&P 500 is right around 3,030 to 3,035.

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The picture for the Nasdaq looks similar as it is still over 2.5% above its 50-DMA of 8,265 and about 2% above its breakout point.

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The Russell 2000 is a different story. Since breaking its downtrend around Halloween, it has tested but remained above its former uptrend line ever since.

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Turning to individual groups, the chart of the S&P 500 Software group looks very similar to the S&P 500 and the Nasdaq- a decent-sized pullback but no signs of a breakdown yet.

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Semis are a group we track more closely than any other, and it has also had a bigger pullback than any other group. Today was the first day for the index as it tested its 50-day moving average right after the open and has held the level ever since. If the 50-day moving average doesn’t end up holding, the next level to watch would be the uptrend line from the lows a year ago. If neither of these levels do manage to hold, the rumors of Santa staying home this year may just turn out to be true.

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Lastly, we want to highlight the VIX. It hit 11 a week ago, but that didn’t last long. On Monday, it closed just under 15, and early on Monday it briefly touched 18 before pulling back to 16. While there may have been a bit of panic in the air Tuesday morning, even at a level of 18, the VIX wasn’t close to levels it peaked at in pullbacks over the last year. In each of those prior periods, the VIX topped 20.  

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