Stocks are experiencing declines, with major indices down for the week. The NASDAQ index has decreased nearly 2%, while the S&P index has dropped 1.4%.
Currently, the Dow industrial average stands at 41,789, down 510 points or 1.21%, and the S&P index is at 5,610.39, down 83 points or 1.46%. The NASDAQ index is at 17,456, down 345 points or 1.94%, and the Russell 2000 is at 2,029.29, down 36.37 points or 1.76%.
Technical Shifts In Market Momentum
Both the S&P and NASDAQ indices have fallen below their 100-hour moving averages. The S&P index is approaching the lows of mid-March at around 5,600, while the NASDAQ index is testing its swing low from March 18 at 17,431.67.
That drop in stocks reflects a broad pullback across multiple sectors, not just isolated to technology or small caps. The S&P and NASDAQ slipping beneath their 100-hour moving averages isn’t just a technical footnote—it marks a shift in short-term momentum. When indices move below these averages, it’s often interpreted as confirmation by many that selling pressure has returned with more consistency.
The S&P hovering just above the 5,600 level, which served as support back in mid-March, adds another layer to short-term direction. Should that figure fall, we’d likely see further downward movement until the next clear support emerges, possibly closer to early Q1 levels. The NASDAQ’s proximity to its swing low from 18 March only confirms the view that buyers are not stepping in with conviction yet.
It may be useful to think of volatility over the next week as expanding, not contracting. Short-term breakdowns like this tend to feed momentum–at least until new variables interrupt current direction. Investors who typically concentrate on relative strength in metals, technology or small-caps are probably already aware of how their shares are reacting compared to the broader market. That divergence can offer signals as well.
Adjusting Strategies Amid Increased Volatility
From our perspective, the breakdown below the 100-hour moving average has changed positioning priorities. The common approach involving intraday bounces from these trendlines won’t work unless there’s an unexpected driver pushing equities higher—likely something not in recent data.
With both major indices giving back recent gains, we’ve scaled back short-duration bullish exposure. When dynamism recedes and volatility increases, patience often pays. We’ve adjusted position sizes and are focusing more on price structures than sentiment indicators at this stage. It’s not a complete reset, but more a revisiting of high-probability zones for entries. The price behaviour now requires more reactive setups, not anything based on anticipated mean reversion too early.
One additional factor: the Russell 2000, often seen as more prone to domestic economic fluctuations, has fallen nearly 2%—a reminder that risk appetite overall has cooled. Its decay hints that confidence is thinning at the edges first, something we’ve seen behaviourally in prior market pauses. For those managing leveraged positions, we’d say it’s time to mirror that cooling by narrowing exposure into uncertain data reads.
Also, we’ve kept an eye on correlations. When the broader indices start breaking through previous short-term supports at the same time, it brings with it a rise in cross-sector linked volatility. This makes it harder to rely on hedges that worked well earlier in the month. Strategies that fed off non-correlation between larger and smaller names won’t be as dependable until selling pressure settles.
We’re monitoring the options pricing shifts, particularly around implied volatility on major indices. There has been a noticeable rise, not yet abrupt, but steadily creeping. That tells us traders are paying more for protection going forward, and that skew is affecting shorter-term derivative pricing. Those using weekly options now need to be more selective with entry points. Delta hedging becomes more active as price ranges widen.
Lastly, participation figures coming into the decline suggest there’s no capitulation, but also little conviction for a near-term bounce. Until volume metrics align with price troughs, attempts to go long may need to remain tactical rather than conviction-based.
