US Equities navigating trade uncertainty and fear of global recession.
Stocks continue their volatile behavior this month. After a tough first week of March in which all major indices closed down (Dow -2.37%, S&P 500 -3.10%, NASDAQ Comp -3.45%, NASDAQ 100 -3.27%, Russell 2000 -4.05%), U.S. stocks continued their shift downward on Monday. Most notably, the S&P 500 Index closing below it's 200-day moving average while the NASDAQ Composite Index closed down -4.00%, its largest single-day decline on a percentage basis since September 2022.
While the NASDAQ Comp suffered the biggest decline of the major blue-chip stock indices yesterday, they all closed in the red, including the Dow Industrials (-2.08%), the S&P 500 (-2.7%), the NASDAQ 100 (-3.81%) and the Russell 2000 (-2.72%).
Meanwhile, the volatility index (VIX) continues its upward movement, closing over 27 yesterday - above last week's close of 23.37, and notably above the two monthly closes so far this year (16.43 in January, and 19.63 in February).
So let's now turn our attention to the charts to study price movement by looking at our trend lines and oscillators (the Socrates Energy Model and Stochastic, see more information below the charts). When you step back from the Daily view into the Weekly and Monthly view you can see the markets are testing areas of support and some might be at risk of losing momentum for a relatively extended period. The coming days and weeks will be key.
Daily Price Charts (as of the close for yesterday, March 10, 2025)
Weekly Price Charts (as of the close for yesterday, March 10, 2025 | reflects one-day into the current week)
Monthly Price Charts (as of the close for yesterday, March 10, 2025 | reflects six days into the current month)
The Energy Model oscillator is positioned at the bottom of the chart with green or red bars and a moving average (white line). When you see consecutive spikes of green bars above its moving average it could be a sign the market is at risk of losing momentum ahead, which could mean a change in direction approaching.
Notes on Stochastic studies:
- The Socrates Platform has a unique three-measurement Stochastic oscillator: Blue (a "fast" measure), a Yellow (a "mid" measure), and a Red (a "slow" measure).
- When you log into Socrates you'll see the Stochastic values: >80 is commonly interpreted as a market with potentially "overbought" conditions, whereas a value of <20 is considered possibly "oversold" conditions.
- On a price chart, look for Stochastic line crossovers. Generally speaking, a "fast" crossover is typically associated with price direction changes, whereas a "slow" crossover is often considered alignment of momentum and trend.
- In Socrates specifically, look for when the blue and yellow both cross the red:
- A cross above the red (when <20 value, or "oversold" conditions) can be a relatively strong signal that a move up may be underway (i.e. red will be the lowest position / value of the three in this scenario)
- A cross below the red (when >80 value, or "overbought" conditions) can be a relatively strong signal that a move down may be unfolding (i.e. red will be the highest position / value of the three in this scenario)
- This study most helpful on Monthly time levels, but it can be helpful to follow along more frequently using the Weekly time level as it could indicate how the next month may form. Also good to check Quarterly view to maintain a longer-term perspective.
- Keep in mind a "fast" (blue) stochastic is more sensitive to recent price changes than a "slow" (red) stochastic. In Socrates, this can also be true for the "mid" (yellow) stochastic.
- Given the Daily time level is most vulnerable to volatility, monitoring stochastic values on the Weekly time level (after each weekly close) it can help filter out some of the noise. Ultimately it's good practice to see if this behavior on the Weekly aligns with values on the Monthly time level (after a monthly close).
- Important: Stochastic studies alone are not necessarily a sign of a true change in trend. Look to align this behavior with other data and indicators within Socrates.
When studying price charts in the Socrates Platform, it can also be helpful to pay close attention to trend lines as a visual reference for where levels of technical support and resistance may exist. Pro and Enterprise users can access our auto-generated technical lines from our computer models.
Researching markets across different time levels offers a much better view of short-term vs long-term activity. Many follow financial markets on a daily basis, which can certainly be helpful - especially when considering potential market entry or exit - but it's important to keep in mind daily price movement is most vulnerable to spikes in volatility with reactionary or false price moves.
For these reasons indicators can become more insightful on Weekly and Monthly views. And if you're focused on long-term trend, it is best to focus on the Monthly (and even Quarterly) time level.
Regardless of time level, a change in direction can just be a (relatively) short-term move or brief market correction, it does not necessarily mean it is a true change in the longer term trend. This is why studying market behavior consistently over a period of time, and across multiple time levels (daily, weekly, monthly, etc) is helpful.
Also, while intra-day price movement can be valuable, the our proprietary computer models heavily weight closing price as a stronger signal of sentiment for that trading period (that day, week, etc).
Log in to Socrates to research these and other global financial markets. See how - or if - price movement aligns with what different technical indicators and models are picking up on across various time levels (weekly, monthly, etc). This can help shed light on what might be ahead on both a short and long term basis.
Not a Socrates Platform member yet?
With over 1000 global financial instruments to research - including stocks, ETF's, commodities, bonds, foreign exchange / currencies, and more - the Socrates Platform allows members to monitor financial market activity from around the world using price charts, technical studies, custom watchlists, unique indicators, and proprietary computer models.
In addition to the Energy Model, all Socrates users have access to our proprietary Global Market Watch pattern recognition system and our Indicating Ranges across multiple time levels. These color-coded signals act as a complement to more detailed studies of price charts and technical price levels.
Pro and Enterprise members can go deeper in their research with the Reversal System and Timing Arrays, as they look for potential areas of technical support, technical resistance, and turning points ahead.
Click here to compare membership plans, or sign up for Socrates platform today!
NOTE: The Socrates Platform is not a financial service and does not provide financial advice. It is a research platform for informational and educational purposes only. Investments and trades include risk of financial loss. Before making any investment or trade, it is important to consider whether it is suitable for you. Consider seeking advice from a certified financial adviser.
