The market settled in a sea of red on Thursday following disappointing economic news and the continued fallout over negotiations on another coronavirus stimulus package. The losses held near-term and key support levels with the bulls needing a bounce back on Friday to avoid their 3rd-straight weekly loss.

The Dow had its 4-session winning streak snapped after testing a morning low of 27,647 while closing at 27,901 (-0.5%). Near-term and upper support at 27,750-27,500 was tripped but held. A close below the latter would suggest additional weakness towards 27,250-27,000.

The Russell 2000 tested an opening low of 1,526 before going out at 1,542 (-0.6%). Prior and upper support at 1,540-1,525 was breached but held. A move below the latter would indicate further weakness towards 1,515-1,500.

The S&P 500 settled at 3,357 (-0.8%) following the intraday backtest to 3,328. Prior and upper support at 3,350-3,325 was breached but held. A close below the latter and the 50-day moving average would signal further downside risk towards the 3,300-3,275 area.

The Nasdaq ended at 10,910 (-1.3%) after plunging to a midday low of 10,793 and closing back below the 50-day moving average. Prior and upper support at 10,800-10,700 was breached but held. A move below the latter would suggest further downside risk towards 10,600-10,500 and levels from late July.

The recent Friday’s closing have been bearish over the past few weeks and the back half of September is typically a weak month for the stock market. It will be import for the bulls to reverse this trend tomorrow and to possibly avoid a third-straight weekly loss.

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Rick Rouse

CEO, Editor and Chief Options Strategist