As the first quarter of the year came to a close, all of the major averages key support levels are being tested. The Dow Jones Industrial Average (see chart here), the S&P 500 (see chart here), the Nasdaq Composite (see chart here), and the small-cap Russell 2000 (see chart here and below) have all experienced selling pressure for the better part of the year. Ever since the new administration has taken office, the stock market has been selling off to the point of the 200-day moving averages of the aforementioned indexes have all been breached. It’s no secret that the constant flow of tariff news coming out of Washington is one of the main reasons why stocks are selling off. Markets do not like surprises and/or uncertainty and we have had more than enough lately.
As mentioned above, not only are the major averages support lines being tested, all of them have breached their 200-day moving averages which historically is a major support and/or resistance line. Please note, key support lines such as the 200-day M/A can indeed be breached and that doesn’t necessarily mean the end of the world. Major support lines can break temporarily before a reversal ensues. I am not suggesting this will occur, what I am saying is that just because a support line has been breached, it does not mean it’s a permanent situation.
What any market participant looks for and asks in market environments such as the one we are in now is; “when will the selling pressure stop?” Frankly what I am looking for is an end to the daily tape bombs on tariffs, the economy, consumer confidence etc. Things should begin to calm down once the markets understand how, why and when these dramatic policy changes will provide more benefits than drawbacks. We are going to need time to see how these tariffs will play out or just maybe our government will start changing its tune. Good luck to all 🙂
~George