Market Volatility Continues: What to Watch Now

A Look at Where Stocks Settled

Before diving into my weekly analysis, I wanted to include this broader segment because so many charts look the same right now. Last week’s selloff pushed stocks through key moving averages, with most finding some kind of support.

• Some stocks landed right at their 200SMA, a major level where dip buyers tend to step in. Whether this holds or breaks will be key.

• Others dropped below their 50SMA but paused at other key levels—trendlines, horizontal supports, or previous breakout zones. The question now is whether that’s enough, or if they drift lower toward their 200SMA.

• Some stocks bounced but remain stuck between levels, meaning they could chop sideways before making their next move.

What’s significant here is not just where stocks landed, but how they react from here.

What to Watch for This Week:

📍 Do the 200SMA stocks hold? Stocks that landed here will need to prove demand is strong enough for a meaningful bounce. Otherwise, a breakdown could mean a bigger trend shift.

📍 For those stuck near the 50SMA, does resistance push them lower? If these stocks can’t reclaim lost levels, sellers could step in again.

📍 Sideways action first, or straight into the next move? After big moves, some digestion is normal. If we see choppy action, it could be stocks setting up for their next leg.

It's less about predicting the move and more about observing how price reacts at these key levels. Remember, we take action after the market confirms what it wants to do.

S&P 500 Weekly: Key Support Holding (for now)

The S&P 500 closed at 5,770, dropping just over 3% from the prior week, after landing right on the 5,674 level, an area that has played a major role in past price action.

• First it was resistance. The market rejected this level twice before breaking through it in September.

• Then it became support. Buyers defended it in October and November, and once again last week, helped by the weekly’s 50SMA.

• A potential shift: We just made a lower low compared to the last dip. That’s a notable change in structure.

So, what happens next?

Two Main Scenarios: Bounce or Breakdown

Scenario 1: A Bounce to 5,864, Maybe Higher

• The market doesn’t move in a straight line, so even if we’re heading lower, a relief bounce is likely first.

• The first upside target is between 5,864 and 5,920 (near the 20EMA), where sellers could step in.

• If buyers push through, we could see a test of 6,000. This will be a key decision point where the market will either form a lower high and roll over or reclaim momentum for the bulls.

Scenario 2: A Breakdown to 5,400

• If 5,674 (and the weekly 50SMA) fails, I expect a move toward 5,400, a previous consolidation zone where dip buyers may show up.

• That move might not happen in one straight drop. We could see a bounce back to 5,864 first before breaking lower.

Trading Takeaways

• If we bounce, there’s room for calls, but I’d be cautious around 6,000—that’s the key test.

• If we lose 5,674, puts become the play, with 5,400 as the next major downside target.

Analysis on Net

NET cut straight through its key moving averages and landed on trendline support, after testing 120. This is where buyers have stepped in before.

Key Levels to Watch

• 138-144 – The first level to reclaim around the EMAs. Also prior support, right before its gap up.

• 126 – Current support zone, sitting on trendline support.

• 120 – A potential retest. If NET breaks this level again, we could see a deeper decline to 106 or the daily 200SMA.

Potential Scenarios

🔼 Bullish Scenario

• A hold at 126 and a bounce toward 138-144 to retest resistance.

• If NET clears 144, there’s room to 153+ before a bigger decision.

• Bulls will want to see stronger volume to confirm a shift in momentum.

🔻 Bearish Scenario

• If 126 fails, the next stop is likely 120, a level where dip buyers may try to step in.

• If sellers stay in control, NET could drift lower toward 106, where the longer-term trend would be challenged.

• Any bounce into 138-144 could just be a retest before rolling over again.

⚖ Neutral Scenario (Most Likely Right Now)

• Given how far NET (and a lot of other stocks) are from their smaller EMAs, I lean toward some sideways chop.

• This would give moving averages time to catch up before the stock decides on its next move.

• We may see some back and forth action between 126-144 before a bigger breakout or breakdown.

Overall, with how fast things sold off, some sideways action wouldn’t be surprising before the next move. Last week was full of volatile intraday swings, with dip buyers trying to hold the line while sellers kept the pressure on. Now we wait to see whether we’re setting up for another leg down, or if the bulls are ready to push back.