Inside Markets — Downside Targets

SPX: The SPX closed below its 50-day moving average yesterday with today’s jobs-induced pullback resulting in CTA de-grossing. The index is currently trading below predetermined support at 5442. If sustained, a close below 5442 would open the door to further downside to 5315 with the 5070-5170 range looking like the ultimate target (~5.2% to midpoint from here).

NDX: The Nasdaq 100 (NDX) is the weakest of the major indices with more room for downside given still crowded positioning. The NDX is currently trading below key technical support at 18,540. A close below 18,540 gives us a new target range of 17605-17690 (~4.4% to midpoint).

SOX: The bearish reversal in the Philadelphia Semiconductor Index (SOX) on 8/22 forms the right side of a multi-quarter head and shoulders pattern. The reversal and bearish pattern set the index up for a test of support in the 4210-4390 range. The midpoint of that range suggests another ~5% downside. Semis are a crowded long trade that needs to unwind further, but the broad semi cycle is slowly recovering from a demand-led downturn that started in H2’22 and the pullback will be an opportunity to add exposure in our opinion.

Vol: The CBOE Volatility Index (VIX) is back above 20, which pressures forward multiples and becomes a headwind for rally attempts.