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Technically speaking, the market backdrop continues to deteriorate amid a bearish second-quarter start.

On a headline basis, the S&P 500 is challenging its 200-day moving average amid aggressive selling pressure, including a 9-to-1 down day registered during April’s first session.

Before detailing the U.S. markets’ wider view, the S&P 500’s SPX, +0.42% hourly chart highlights the past two weeks.

As illustrated, the S&P has violated its 200-day moving average, currently 2,590.6, notching its first close lower since June 2016.

The downturn punctuates last week’s failed retest of major resistance (2,673).

Tactically, the 200-day remains a headline inflection point, and is followed by overhead at 2,605, and the more distant March close (2,641).

Meanwhile, the Dow Jones Industrial Average continues to whipsaw amid less-charted territory.

But notably, the Dow has thus far maintained its 200-day moving average, currently 23,436.

Tactically, near-term resistance remains poorly-defined, though the 23,940 area marks an inflection point.

Against this backdrop, the Nasdaq Composite has notched its latest one-month low.

From current levels, first resistance matches the March low (6,901) and the 2017 close (6,903).

This area is followed by the slightly more distant 7,000 mark, closely matching the 2017 peak illustrated below.

Widening the view to six months adds perspective.

Perhaps not surprisingly, the Nasdaq’s intermediate-term backdrop remains bearish.

The March island reversal has been punctuated by a violation of the trendline — a subsequent failed retest of the trendline from underneath — and the April downdraft to new lows.

Recent weakness places the 200-day moving average, currently 6,750, within striking distance. The Nasdaq is the lone widely-tracked U.S. benchmark yet to tag the 200-day.

Looking elsewhere, the Dow Jones Industrial Average has reached, and initially survived, a headline technical test.

To reiterate, the index has maintained its 200-day moving average, currently 23,436, on a closing basis.

More broadly, the Dow’s intermediate-term backdrop remains bearish. The index is digesting its March break from a symmetrical triangle amid rally attempts that have lacked follow-through.

Separately, the 50-day moving average’s slope has ticked lower, also consistent with an intermediate-term downtrend.

Tactically, resistance broadly spans from about 24,525 to 24,720, levels matching the March gap and the 2017 close. An eventual close higher would mark a step toward stabilization.

Meanwhile, the S&P 500 has violated its 200-day moving average.

Consider that the S&P has not registered consecutive closes under the 200-day since March 2016, a streak that is at risk with the shaky second-quarter start.

The bigger picture

Collectively, the early-April downdraft has incrementally damaged an already-bearish intermediate-term backdrop.

Moving to the small-caps, the iShares Russell 2000 ETF has violated support, selling off to its latest test of the 200-day moving average.

Though the small-cap benchmark closed fractionally atop the 200-day, currently 147.95, the retest remains underway. Tactically, former support, circa 150.50, pivots to resistance.

More broadly, market bears will point to a developing double top, defined by the January and March peaks.

Similarly, the S&P MidCap 400 has narrowly maintained its 200-day moving average, currently 333.20.

Still, the prevailing downturn has been fueled by a sustained volume increase, and punctuated by thus far lackluster rally attempts. Bearish price action.

Meanwhile, the SPDR Trust S&P 500 has violated its 200-day moving average, currently 258.75.

Though downside follow-through has thus far been contained, the SPY’s prevailing backdrop registers as solidly bearish.

Recall that the March downturn resolved a double top, the “M” formation defined by the February and March peaks. Meanwhile, the subsequent rally attempt has been lackluster, capped by well-defined resistance.

Bearish market internals pace selling pressure

Against this backdrop, the recent market internals have registered bearish extremes. Specifically, Monday’s NYSE declining volume surpassed advancing volume by a 10-to-1 margin.

The downturn builds on the March 22 plunge — seven sessions ago — a 9-to-1 down day.

In a textbook world, two 9-to-1 down days, across about a seven-session window, would reliably signal a major trend shift.

More plainly, recent bearish price action has dovetailed with effectively textbook bearish market internals.

Summing up the backdrop

All told, the U.S. benchmarks’ bigger-picture backdrop continues to deteriorate.

As it applies to the S&P 500, familiar downside inflection points remain in play Specifically:

The 200-day moving average, currently 2,590.6.
The S&P’s 10% correction mark of 2,586.
The March closing low of 2,581.00.

Against this backdrop, the S&P closed Monday at 2,581.9, almost precisely matching last-ditch support.

Still, the downturn also marked the first closing violation of the 200-day moving average since 2016 amid technically aggressive selling pressure.

Moreover, the prevailing downturn originates from the S&P’s first notable overhead, the 2017 close of 2,673. Last week’s high (2,674.8) matched resistance.

So tactically, an eventual close atop resistance broadly spanning from 2,673 to 2,695, would place the brakes on bearish momentum.

Pending such a move, the S&P 500 remains vulnerable to an eventual violation of the 200-day moving average. On further weakness, the S&P’s downside target projects to the 2,530 area, a level closely matching the March low (2,532).

More broadly, the 200-day moving average generally defines the longer-term trend, and a violation would raise a technical red flag. The S&P 500’s primary uptrend remains under siege pending technical repairs.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Profiled last week, Amazon.com’s AMZN, +0.33% backdrop continues to crack.

Late last month, the shares gapped firmly lower, pressured amid concerns that the White House may seek to regulate the company or adjust its tax treatment.

The downturn has been fueled by a sustained volume increase, and punctuates a violation of the breakout point, trendline support and the 50-day moving average.

Tactically, notable resistance matches the bottom of the gap, circa 1,456, and an eventual close higher would mark a step toward stabilization.

Meanwhile, Alphabet, Inc. GOOGL, -0.64% — also profiled last week — remains tenuously positioned.

As illustrated, the shares have recently whipsawed at the 200-day moving average, currently 1,025, notching consecutive closes lower last week for the first time since July 2016.

More broadly, the prevailing downturn has been fueled by a sustained volume increase, building on the February downdraft after the company’s quarterly results. The intervening rally attempt has been fueled by decreased volume, and capped by trendline resistance, amid a double top defined by the February and March peaks.

Last-ditch support matching the range bottom (997.00) has thus far held on a closing basis. Still, recent rally attempts have lacked quality.

Tactically, a sustained rally atop the 200-day moving average, and more distant overhead, circa 1,050, would place the brakes on bearish momentum.

Recall that fellow market favorites Facebook and Tesla have already broken down technically amid recently rotational FAANG-related selling pressure.

Charting the U.S. sub-sector backdrop

Moving to specific groups, the U.S. sub-sector backdrop continues to deteriorate. Several influential sectors area approaching important technical tests.

To start, the iShares Transportation Average ETF is pressing major support.

The specific area matches the 200-day moving average and the November breakout point, broadly spanning from about 179.30 to 182.00.

Tactically, the prevailing tight one-week range encompasses lackluster rally attempts leaving the group vulnerable to eventual downside follow-through.

More broadly, consider that the downward sloping 50-day moving average has recently capped the group. An eventual close atop the 50-day, circa 190.10, would place the group on firmer footing.

Meanwhile, the Financial Select Sector SPDR XLF, +0.35% is precariously positioned.

As illustrated, the group has recently violated its trendline, plunging to retest the 200-day moving average, currently 26.72.

The subsequent tight one-week range has been capped almost precisely by the breakdown point, a level matching the early-March low (27.89).

Here again, the group’s limp rally attempts from the 200-day increase the risk of eventual downside follow-through. A close atop first resistance would place the brakes on bearish momentum.

Looking elsewhere, the Consumer Staples Select Sector SPDR XLP, +0.81% is traversing a firmly bearish technical backdrop.

Consider that the early-February downdraft — encompassing a violation of the 200-day moving average — has been followed by the mid-March plunge to 52-week lows.

The subsequent rally attempt was capped by the breakdown point, and punctuated by a strong-volume downturn to start April. Nearly textbook bearish price action.

An eventual close atop resistance, circa 52.50, would mark technical progress.

Finally, the Energy Select Sector SPDR’s XLE, +0.94% backdrop remains bearish.

Technically, the group has flatlined at major support, pressured even amid the March crude-oil price rally.

The tight range is a continuation pattern, pinned to the February downdraft, and bisected by the 200-day moving average.

As detailed previously, a violation of support, circa 66, likely opens the path to a retest of the 2017 low (61.80). Conversely, a break from the range top would strengthen the backdrop, laying the groundwork for a potentially material near-term bounce.