Market Recap: Big Tech Drags Markets Lower

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Alex Partida

Dec 27th 2022  .  4 min read

Market Recap: Big Tech Drags Markets Lower

The markets took a break over the holiday weekend, looking to get a fresh start Sunday evening. Prior to the opening of the cash session, S&P 500 futures were trading positive. Shortly before the bell rang, futures encountered resistance at the psychological level of 3,900. This resistance caused the market to fall, leading to a 60-point descent that extended into the opening of the cash session.

During the opening of the cash session, the S&P 500 futures experienced a steep decline, falling by 90 points from the psychological level of resistance at 3,900. This heavy resistance caused the market to fall, leading to a downward trend that continued for the rest of the session. Despite this significant move, the 3,900 level remained the most significant for the day.

The S&P 500 futures saw an aggressive push off their lows at 3,840 during the trading session, allowing them to reach the Volume Weighted Average Price (VWAP). This recovery was a significant move as it allowed the market to stabilize after initially experiencing a sharp decline. It is important for the market to find support at key levels, such as the VWAP, in order to prevent further downward momentum.

Options with Sam Shames
Futures with Neil Yeager

Using VWAP to identify weakness

For the rest of the trading session, the stock market indices struggled to climb back above the Volume Weighted Average Price (VWAP). This type of price action indicates that although the market recovered somewhat in the middle of the day, the overall trend was still bearish. The market was unable to maintain gains and remained below the VWAP, signaling a continuation of the downward trend.

The price of the market struggled to maintain its position around the Volume Weighted Average Price (VWAP) throughout the day. Despite making attempts to rise, it faced strong selling pressure that ultimately pushed it lower. It was difficult for buyers to overpower the bearish sentiment and drive the market upwards.

The Volume Weighted Average Price (VWAP) is a great way to gauge the trend on an intraday chart. VWAP will act as a support or resistance based on the sentiment of the overall market, particularly an individual day. With the market struggling to get anything above VWAP, it indicated that the sellers remained in control despite trading relatively sideways. 

Today’s price action indicated sellers are still in the market even after last week’s blood bath.

Last Friday and over the weekend, the S&P 500 futures showed potential exhaustion from the sellers, but with today’s lack of buying, more selling may be to come. 

It’s normal for a market to take a few days off to rest or find balance, even in the strongest trends. This can be seen as healthy for the market.

Range bound 

To establish an upside move, the market needs to trade above the significant level of 3,900, which was important in today’s pre-market activity.

To have a clear upward trend, the market needs to trade above the psychological level of 3,900. If it breaks below 3,800, it could lead to panic selling. Until either of these levels are broken, there is likely to be volatility between 3,900 and 3,800.

Tesla depletes markets buying power

The stock of Tesla Motor Company (TSLA) continues to be a key focus as its significant decline today dragged down the Nasdaq. The company saw a drop of over 11% today due to strong selling pressure. Keep an eye on TSLA as it continues to impact the market.

Markets start trading week in red

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 0.32%, losing 12 points, while the Nasdaq futures closed down 1.39%, declining 153 points. The Dow Jones futures did not follow, closing up 0.17%, rising 58 points.