Stock Indices Break Important Support

The Stock Indices traded below important support, which suggests a potential test of longer-term support. Once shorter-term levels were broken, it opened a flood of selling that now suggests the February 24 lows will be tested. Those lows are critical. Trading below them opens up a much larger degree of time and price move lower.

The Indices reached a short-term point of being oversold at the close. This suggests the possibility of some type of pause or countertrend rotation to work off the oversold condition. However, based on potential news events, there could also be another leg lower on Monday to test longer-term support. If today’s low is traded through and breadth is diverging, expect a potential rotation. On the other hand, if the market trades lower and breadth is as weak as it was today, the price decline could accelerate.

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