The last day of the month in the stock market looked good to start, then failed.

Both the S&P 500 futures and Nasdaq futures were trading positive heading into the open. Throughout the night both indexes made positive movement with little resistance from the bears. That was the case for the majority of the night until running into the 50-day simple moving average (SMA).

This key moving average provided a resistance that the bears would defend into the later stages of the overnight and after the opening bell. Prior to the open, the bulls did make one last run toward the 50 SMA before being rejected again just prior to the bell that started the day on Wall Street.

Bulls, bears fight early for market strength

At the opening bell the bears continued the selling pressure that stemmed from the 50 SMA. Yet, this selling pressure was short lived. The bulls were able to quickly step in and halt the bears. This reversal was strong and looked promising. The level above was the 50 SMA, and whether price could break through and provide strength for a rally? 

The answer was a quick and short, “No.”

When price was brought back to the 50 SMA the bears quickly stepped back in to assert dominance. This level was not going to be broken for the rest of today.

The bears had been determined to defend this level bringing through strong selling pressure that sent the market lower.

After the strong flush that came on the back of the bears, there were new lows made in the mid-morning. These lows would eventually be taken out, but not before going back to revisit the volume weighted average price (VWAP). On days with strong buying or selling a cover pop back to VWAP can be seen throughout the day. On really strong days of selling or buying this can be a great spot to watch for an entry as long as the trend continues.

Fierce price action during power hour

The rest of the session leading into the power hour followed a similar pattern that is not new to most traders. Throughout the day the market continued to make lower highs. The highs would often come right to VWAP before continuing lower. This pattern continued throughout the day before finally breaking the previous low of day right before the last hour, or power hour.

When power hour arrived the bulls had life and they charged. For the first time since the opening bell sounded, there was an aggressive and strong move to the upside.

This move can be attributed to the end of the month rebalancing. The end of the month before close can provide for volatile action.

The move to the upside in the first half of power hour was quickly taken back by the bears. To end the day the bears put on a show, selling with aggression. The selling pressure was enough to bring the market to new lows on the day before the closing bell.

Another down day for the stock market

Both the Nasdaq and the S&P 500 futures were negative to close the day. The S&P 500 futures closed down .72%, losing 29 points, while the Nasdaq futures closed down 0.44%, a loss of 55 points. The Dow was down 243 points, losing .77%.

This was the fourth consecutive down day for the month.

To learn more about how Simpler’s traders work daily sessions like this, check out Simpler Options.