Round Number Rejection:
Long-term readers of mine know my affinity for round number theory. It is coming into play with a couple of the major benchmarks. The S&P 500 never really felt comfortable above the very round 6000 figure and after dropping every day last week it is now “just” 4% from its recent all-time high. Bears are salivating over the possible break below the head and shoulders pattern with a break below a 5850 pivot carrying a measured move to 5600. The daily chart below of the Nasdaq shows some ominous signs with a couple of very brief breaks above the 2000 number, suggesting it is not yet comfortable above the figure. It fell all 4 days as well last week on increasing volume with each session, and volume was not as timid as expected into year-end. Taking a look at its MONTHLY chart notice the bearish shooting star recorded in December. It looks similar to the gravestone doji candle seen in November 2021 which led to a 6000 handle decline to the very round 10000 number in October-November 2022. Am I calling for a crash like that, absolutely not, but a prudent pullback could be healthy. Watch for which names hold up best if a steady selloff should arise.