Futures indicate a drop across major indices, with projections of a decline of 289 points for the Dow industrial average, 55 points for the S&P index, and 265 points for the NASDAQ index. On Friday, the Dow fell for the fourth consecutive day, with the S&P and NASDAQ also witnessing declines.
Signs Of Broader Market Weakness
For the week, the Dow industrial average decreased by 0.96%, the S&P index by 1.53%, and the NASDAQ index by 2.59%. The S&P 500 is set to open below the March gap, suggesting a weak short-term outlook, with a potential downside target at 5500.
Resistance now forms around the previous swing area and the 5600 level. The recent decline in support and rejection from key moving averages indicates that sellers maintain control of the market for the time being.
That initial breakdown sets the tone clearly. With the indices under firm selling pressure and futures struggling to hold any ground, what unfolds next becomes a test not just of technical resilience but of sentiment tied closely to macro policy. Those earlier declines—we’re talking nearly 3% on the NASDAQ for the week—are not just noise. They reflect conviction, particularly when they come alongside a firm rejection at technical barriers like the 5600 mark.
We see the S&P now pushing toward a lower boundary, where prior demand failed to step in meaningfully. That breach of the March gap can’t be dismissed. When price opens beneath these zones, it usually doesn’t stay neutral. It either folds deeper or fights back with volume. So far, it looks like the former is playing out, with bears responding to rejection at key levels. Sustained selling beneath moving averages is not your ordinary pullback. It tells us pressure has shifted cleanly in one direction, with buyers either sidelined or liquidating.
When resistance forms near previously active zones and price keeps tagging them without breaking through, it can lead to a pattern of lower highs and lower lows. That’s often how trend confirmations begin. These aren’t early stages anymore. The failure to hold above swing levels points toward increased directional clarity, with short-dated options pricing in heightened premium risk—likely due to the uncertainty around next week’s policy effects.
Volatility Driven By Technical Pressure
This kind of motion should feed through into volatility strategies. Short gamma positions become harder to manage in a market like this, particularly when the indices open with strong gaps. The pressure on short-delta portfolios increases near lows when liquidity becomes one-sided. If that continues into the early sessions, we could even see hedging flow start to push prices toward areas buyers previously ignored, including that 5500 zone mentioned.
