Small-Caps Give Up 2017 Gains

Small-Caps Give Up 2017 Gains

3/22/2017

8:00am (EST)

The bears had their best day of the year and reminded Wall Street why they like taking the elevator lower. The bulls stair-stepped to higher highs on Tuesday's open but retreated shortly after Tech tapped another all-time high. The VIX spiked 10% but held a key level of resistance into the closing bell. There is still a little wiggle room to see if the market is shaking out the weaker hands, but not much, with the small-caps now showing a loss for the year.

The Dow tumbled 237 points, or 1.1%, to finish at 20,668. The blue-chips traded to a high of 20,970 with lower resistance at 21,000-21,200 holding on the open. The plunge to 20,653 held support at 20,600-20,550. There is risk to 20,400-20,350 and the 50-day moving average on a move below the latter. The bulls to recover the 20,800 level to regain momentum.

The S&P 500 stumbled 29 points, or 1.2%, to settle at 2,344. The index tested a high of 2,381 after opening at 2,379 with resistance at 2,390-2,400 easily holding. The late day low reached 2,341 with backup support at 2,340-2,335 holding. There is risk to 2,325-2,320 and the 50-day moving average on continued weakness. A close back above 2,360 would be a slightly bullish clue the selling pressure is over.

The Nasdaq tanked 107 points, or 1.8%, to close at 5,793. Tech made another all-time intraday high of 5,928 to clear prior and lower resistance at 5,925-5,950. The free fall to 5,790 and close below the 5,800 level was a bearish development. Backup support is at 5,750-5,725 and the 50-day moving average.

The Russell 2000 sank 37 points, or 2.7%, to end at 1,346. The small-caps made a 6-pack run to 1,390 to push lower resistance at 1,390-1,400 but was the first index to retreat. The index closed a half-point off the session low with emergency support at 1,345-1,340 and the 100-day moving average holding. A move below the latter gets 1,320-1,315 in play.

The S&P 500 Volatility Index ($VIX, 12.47, up 1.13) opened lower at 11.15 and kissed a low of 10.92 on the opening pop. The late session test to 12.85 breeched the 100-day moving average with upper resistance at 12.50-13.50 holding. Fresh support is at 11.50 and the 50-day moving average. I have highlighted this area as a key battle ground over the past few weeks and the bears regained a major advantage with yesterday's assault.