We saw significant selling in the first trading day of 2024. Letβs review the indexes and establish key levels to watch throughout the week.
S&P 500
The level that we need to watch on the S&P 500 (futures) is $4735 - our previous breakout level.
It is very possible to retest and/or break this level. Holding here would be a great way to establish support.
It is also important to note that we have a negative divergence on RSI. You can see that the RSI made a lower high, while the S&P made a higher high.
This is a signal of potential weakness ahead.
Additionally, RSI broke the 70 line which can often act as support for sustained moves higher.
Nasdaq
The key level to watch on the Nasdaq is $16,487.75. At this level is where I will be looking to buy the dip.
I am looking to be a net buyer because of how oversold the Nasdaq is. Looking at the 4 hour timeframe, our RSI is at 16.
When you get RSI readings this low on longer timeframes like the 4 hour, we typically see a bounce.
Note the positive divergence and bounce when the 4 hour RSI dropped under 30 on the left side of the chart below.
Russell 2000
The Russell is re-testing its breakout - this is very easy to see from the chart below.
We are looking for previous resistance to become support - which it looks to be doing.
The key level to watch is $2000.
For a deeper dive into the indexes, watch this 5 minute clip below: