Is Volatility About to Spike? Key SPX, NDX, RUT Levels to Watch

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Market Overview

U.S. stocks slipped to start the week amid the imposition of tariffs and subsequent trade negotiations involving the United States, Canada, Mexico, and China.

However, stock indexes regained some ground, ending with fractional declines for the week after some of the tariffs were temporarily rolled back. Expect to see moderation in returns and increased market volatility ahead.

The stock markets in the U.S. and Canada are positive this year thus far, despite the uncertainty around U.S. policy and tariffs. The S&P 500 is up about 2.5%, and the Canadian TSX is up about 2.9% year-to-date. Bond markets are also positive.

From a market perspective, after two back-to-back years of solid gains in the U.S. and low volatility during this period, we might expect to see moderation in returns and increased market volatility ahead.

Technically, both the Nasdaq 100 and S&P 500 indices saw pullbacks on Friday from their recent declining top-line resistance levels after three consecutive positive sessions from Tuesday through Thursday. As a result, their recent consolidation patterns have extended.

Key Support and Resistance Levels

Key short-term support exists near the NDX 20,975–21,000 and SPX 5,905–5,925 zones. I’m closely monitoring these key levels for possible violations. On the upside, key resistance now exists near the NDX 21,950–22,000 zone and in the SPX 6,121–6,128 zone.

The Russell 2000 index (RUT) has been trading sideways over the past couple of weeks and, like the SPX, appears to be up against near-term resistance. For the RUT, that resistance level is at the 50-day Simple Moving Average (SMA). Until the index can register more than one close above this moving average (as it did on Wednesday this week), the near-term technical outlook might be considered bearish.

Group strength leadership over the last month was seen in the basic materials, financials, and consumer defensive sectors. Last week, basic materials also led. The consumer cyclical sector was by far the worst performer over those time periods.

Commodity Highlights:

• Gold: The price of gold set a record high for the second week in a row, extending a nearly three-month price surge for the precious metal. On Friday, gold briefly traded above the $2,900-per-ounce level for the first time before retreating slightly to around $2,890 in afternoon trading. Twelve months ago, gold was trading just above $2,000.
• Crude Oil: The price of U.S. crude oil fell for the third week in a row amid escalating trade tensions and related concerns about a potential softening of oil demand. The commodity was trading around $71 per barrel on Friday afternoon, down from a recent high of about $80 per barrel on January 15.

Final Thoughts

As always, we’ll continue to monitor the markets technically and report back to you on any important changes. Remember to always “Trade What You See Technically, Not What You Think.”

Harry Boxer, The Technical Trader

*No credit card required