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The selling pressure in the technology sector intensified, leading to the Thursday and Friday selloff. Additionally, distribution from consumer cyclicals, industrials, and Thursday’s sell signal from utilities indicate a broadening of sectors pushing the market lower.
At this point, seven of the eleven sectors are in a sell signal. Consumer defensive and communication services are the only sectors that continue showing accumulation and strong price potential.
The real estate sector has been showing encouraging accumulation lately. Friday’s close back above 50% of the range indicates the bulls reclaimed control. Recent accumulation in the real estate sector may lead to further potential to advance, which I am watching closely.
Insurance stocks’ strength is the only thing keeping financials from total collapse. Capital markets, credit services, asset management, and banks are crumbling. Friday’s S&P 500 selloff was held at the Fibonacci 1.25 expansion from the January-February range at 5679.78 and the top of the July-September 2024 base at 5669.67.
The confluence of significant Fibonacci support offered a springboard for a bounce. However, the rally from Friday’s lows could not reclaim the recent January low at 5726.54. A weekly close below the January low indicates a breakdown from the previous YTD lows and confirmation of a triple top that started on December 6. The bears are firmly in control as the market comes under extreme distribution.
A short-term rally is possible because the S&P 500 is oversold. Closing back above the Fibonacci resistance at 5726.54 would allow a relief rally that could hit the Fibonacci resistance at 5866.84. Closing below 5669.67 will open the trap door to another leg lower. The next downside Fibonacci targets are 5542.10-5532.07, 5394.06, and 5167.98.
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