The week of May 18 will be slower from an economic standpoint, but Jay Powell will speak on Tuesday and Thursday, as well as the release of the Fed minutes on Wednesday, there will be plenty of things that could move the markets.
S&P 500 (SPY)
The S&P 500 could see some more downward pressure based on the technical charts. There is a downtrend that developed last week after the index peaked on May 11. There is also a potentially bear flag that formed on the intraday chart.
S&P 500 Index
The daily chart shows that the index appears to have fallen outside of a rising wedge, indicating that S&P could be heading lower from here. Should the index drop below 2730, it could set up for a much steeper decline towards 2,500. Also, notice that the advance/decline line and the RSI have started turning lower, a potential shift in trend. A more precipitous decline to 2,500 would take, let’s hope, a couple of weeks to play out.
S&P 500 Daily Chart
Keep an eye on the number of stocks in the S&P 500 that are above their 100-day moving average. That measure appears to be losing momentum, as does the number of stocks above their 50-day moving average.
SP 500 Above 100 Day Average
NASDAQ 100 (QQQ)
The Qs also found itself resting on an uptrend, which seems likely a somewhat significant uptrend. The RSI has turned lower, and if that is a sign of things to come, than it probably means the Nasdaq 100 is heading lower, with the Qs moving to $203 to start.
QQQ Daily Chart
Meanwhile, the number of stocks in the Nasdaq 100 above their 50-day moving reached near record-high levels. It, too, has started turning lower, yet another sign that momentum may be shifting.
Nasdaq 100 Stocks Above 50 Day Average
You know what is super scary is that the top 10 stocks in the Nasdaq have a 56% weighting in the Nasdaq 100. Even worse, those same stocks have a 25% weighting in the S&P 500. Meanwhile, 5 of those stocks have a 45% weighting in the Nasdaq 100 and a 21% weighting in the S&P 500. So where these next five stocks go, the markets will go.
Microsoft (NASDAQ:MSFT) is one of those stocks, and shares have been resting on an uptrend, while its RSI has started turning lower. A break of that uptrend gets shares moving lower towards $161, which would also push the stock below its 50-day moving average.
Microsoft Daily Chart
Apple (NASDAQ:AAPL) has already fallen below its uptrend, and all it will take is a drop below $295 to see the stocks move lower towards $265. Its RSI has also started to turn lower as well.
Apple Inc Daily Chart
Amazon.com (NASDAQ:AMZN) has already broken its uptrend, and the RSI is already flashing a bearish divergence suggesting the stock falls back to $2,100.
Amazon Inc Daily Chart
Alphabet (NASDAQ:GOOG) has been rising in a perfect channel higher, but news late Friday about an antitrust suit could spoil the trend. A break of the uptrend creates the potential for a drop back to $1150.
Google Inc Daily Chart
Facebook (NASDAQ:FB) has been rising in a similar channel as Alphabet, and RSI reached overbought levels at 70 and that RSI is also changing trend, and that means Facebook may facing a decline to around $191.
Facebook Daily Chart