Despite reaching overbought levels, the stock market still has room to run as confirmed sell signals have not been registered yet. Major resistance is at 4650, and a pullback to support at 4440 would close gaps on the chart. Market breadth indicators, such as breadth oscillators and cumulative volume breadth, remain bullish. Volatility derivatives and VIX buy signals also support a bullish stance. Recommendations include potential CVB buy signal and a put-call ratio sell signal in Edwards Lifesciences. Trailing stops and rolling procedures are being used for existing positions.
The S&P 500 has been struggling to maintain its rally and is now showing new sell signals from internal indicators. Resistance levels at 4200 and 4300 are strong, while support exists at 3970. A close below 3950 would be extremely bearish for the market. The VIX and its tradeable products are positive, but all bets are off if the S&P 500 closes below 3950.
The Dow Jones Industrial Average lost 0.8% in afternoon trading ahead of Big Tech earnings news, while health care stocks gained and Dow fell after earnings. The S&P 500 and Nasdaq also fell steeply, with several tech stocks flashing sell signals ahead of earnings. Meanwhile, housing remained strong in March, but consumer confidence weakened, and analysts at Comerica see a mild recession over the next 12 to 18 months. Three FANG stocks are on deck this week, with Google parent Alphabet and Microsoft's earnings due after the market closes.
