S&P 500, DJIA, and NASDAQ Enter Correction Phase: Key Insights and Forecasts

The recent market analysis underscores the potential for further downside movement. Last week, major indices including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite achieved new all-time highs, only to face corrections this week.

S&P 500 (SPX) Encounters 2.24% Correction with Additional Downward Risks

Following its peak at approximately 5,342 last week, the S&P 500 is now trending towards its next significant Fibonacci support at 5,192. The 50-day EMA also provides additional support at 5,174. Should this level not sustain, the SPX could find its next major Fibonacci support at 5,099, indicating potential further declines of up to 3%. Concurrently, the MACD lines have crossed bearishly and the histogram trends lower, while the RSI remains non-committal.

Dow Jones Industrial Average (DJI) Faces Significant Technical Challenges

The DJI (US30) initially pulled back from 40,095 to the 0.382 Fibonacci support at 39,004, where it momentarily rebounded. However, it soon resumed its downward course, breaching the crucial golden ratio support at 38,236. This move suggests a likely further decline of approximately 2.6% to the next significant Fibonacci support at 37,124, where the 200-day EMA offers additional support. Although the daily chart exhibits a golden crossover, bearish indicators prevail as the MACD lines and histogram continue their descent, with the RSI offering ambiguous direction.

Nasdaq Composite in a Correction Trajectory

The Nasdaq Composite (IXIC) is currently down by approximately 2%, with further corrections in sight. It approaches a significant support zone between 16,450 and 16,539, with additional Fibonacci supports at 16,340 and 15,850. The 50-day EMA also lends support at 16,287. Bearish signals in the daily chart indicate potential continuation of the correction phase, with the MACD histogram trending lower and an anticipated bearish crossover, while the RSI remains neutral. The Nasdaq could face further declines of around 2.3% reaching the 0.382 Fibonacci support at 16,340.

In the 4-hour chart, despite bearish crossings in the MACD lines and a descending histogram, the bullish confirmation by the golden crossover in the EMAs provides a conflicting signal, suggesting a possible bullish respite amidst the ongoing correction.