Investing.com -- Fairlead Strategies analyst Katie Stockton warned of potential near-term declines for the S&P 500 (SPX) and Nasdaq-100 (NDX) following key technical signals in a note Tuesday.
According to Stockton, the NDX "flashed a daily MACD ‘sell’ signal yesterday," and the SPX "is poised to follow today."
These signals are said to indicate growing downside risk. "Initial downside risk for the SPX and NDX is defined by their 50-day MAs, near 5,780 and 20,140, respectively," said Stockton.
Despite these bearish short-term indicators, Stockton notes that "our intermediate-term gauges point higher for the SPX, for now." However, she cautions that a "weekly stochastic downturn" could signal a more significant correction ahead.
Stockton also highlights weakness in the biotech sector. The SPDR Biotech ETF (XBI) "broke down below support near ~$95 last Friday," marking an intermediate-term setback.
With a "weekly MACD more decisively on a ‘sell’ signal" and stochastics showing room to move lower, she identifies the next support zone for XBI between $88 and $89, defined by both the weekly cloud and a Fibonacci level.
In contrast to the bearish outlook for equities, Stockton notes strength in the agricultural commodities space.
The Invesco DB Agriculture Fund (DBA) appears to be "emerging from a multi-week correction in its long-term uptrend." She points to a breakout above its daily cloud and improving intermediate-term gauges, which put final resistance near $26.50 within reach.
The technical signals suggest a mixed outlook across sectors, with equities facing short-term challenges while commodities like DBA show resilience.