On Friday, the Nasdaq 100 (QQQ) closed -4.4% on the day. Not far behind came the S&P 500 (SPY) at -3.6%, along with the Russell 2000 (IWM) at -2.8%. This comes after each failed to hold support from previous lows dating back to mid-March.

While these technical levels were broken, the reason for the selloff and overall market weakness comes from more than a chartist perspective. With that said, how should we prepare for Monday's trading session, when even safety plays such as precious metals look to be struggling?

When it comes to trading on Monday, we need to first watch for confirmation of the downside. Black lines are drawn in the above charts of the QQQ, SPY and IWM, showing recently broken support levels that need to hold as new resistance levels. However, if these levels are violated and the market continues to sit on the fence between breaking down and holding, sticking to the sidelines is not a bad option, as we should only take trades when we see clear opportunity.

When it comes to picking a side, bearish sentiment is dominating. Small rally days have been short-lived and met with heavy selling. Even if a rally does follow through, overhead resistance from the downward slopping 50-Day moving average (blue line) will need to be dealt with.

Even the commodities space has been in a tough spot. This is because rising inflation, paired with a weak market, has confused investors about how the Fed will react. Some believe the Fed will alter rate hikes to help the market, while others believe the Fed has been dovish far too long. With that said, high inflation and a stagflation type of environment means we should continue to watch the commodities space for opportunities when the timing is right. Therefore, we have our eyes on gold (GLD), Sugar (CANE), Invesco Agricultural ETF (DBA), and more.

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Earnings season has started with a bang in this range-bound market! On this week's edition of StockCharts TV's Mish's Market Minute, Mish takes a deep dive into companies that have already reported and looks at some companies that are set to report soon, all with the the intent to give you a game plan as we end this week and go into next week.

From earlier this week, see Mish take part in the first-everStockCharts Draft! Mish and the other team owners will have a chance to select two stocks from the S&P 100 for a six-month time horizon. Which stocks will be selected and why? Which stock will be selected first? Which names will be left behind? Watch as these eight experts try to draft the best two-stock team!

ETF Summary

• S&P 500 (SPY) 414 pivotal.
• Russell 2000 (IWM): 184 to hold.
• Dow (DIA): 326 next level to hold.
• Nasdaq (QQQ): 317 pivotal or new resistance level. 
• KRE (Regional Banks): Needs to find support.
• SMH (Semiconductors): 225.80 support. 
• IYT (Transportation): 239 support.
• IBB (Biotechnology): Needs to find support.
• XRT (Retail): 70 support.

Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education