Retail traders were on the sidelines through the Labor Day weekend with the stock market closed on Monday. The question heading into the long weekend was whether selling would continue in the futures market – open Monday – while retail traders were enjoying the holiday.

The answer was, “No.” After a slow grind through the holiday, the futures market was trading positively.

When looking at the S&P 500 futures and Nasdaq futures through the weekend, there was low volume due to Labor Day. Still, both indices trended slightly higher after the Friday sell-off.

Positive futures don’t boost stock market

When the opening bell rang to start the short week on Monday, the bears quickly took control of the stock market for retail traders. It appears that big money on Wall Street woke up intending to sell the open. The bears promptly picked up where they left off on Friday.

The price action was reminiscent of the standard second-day continuation of a negative news catalyst. The catalyst came from Russia shutting down the Nord Stream Pipeline, and the bears quickly picked up from where they left off on Friday.

After the bears found exhaustion, the bulls quickly advanced in the market. There was a brief moment of consolidation before the bulls ripped the market higher. The first real strength test came when the price reached the Volume Weighted Average Price (VWAP) level. At VWAP, both the Nasdaq and S&P 500 hesitated briefly before rocketing through this level. Once through VWAP, the market was able to work its way back to the opening level and a high of the day. 

At the high of the day, both the Nasdaq and S&P 500 found resistance from where the bears stepped in to begin the day. The bears and bulls battled it out for the next hour or so. Ultimately, the bears won near the high of day levels.

This resistance sent the market back lower toward VWAP. Being able to hold VWAP in either direction would be a good indication of who is in control of the market. This time at VWAP there was no hold as the bears sliced through the level. This brought the market back toward the psychological level of 3,900. 

Bulls struggle to regain market influence

There was a brief moment where the bulls struck back, bringing the market back to VWAP. This time the bears were ready.

The bears used this level as resistance and quickly prevented  further progress from the bulls. The market found a trend with this rejection for the first time on the day. From this point, the bears were able to send the market back to the psychological level of 3,900.

Looking ahead this week, if price can hold above this 3,900 level, it could be a good sign for the bulls. On the contrary, if the price falls below and fails to get back above 3,900, this can be a good sign for the bears. Traders could then expect to see a continuation to the downside. 

During the last hour of the market, there was a ton of volatility and sideways action.

This price action can be attributed to the big moves made within the session and the market hovering above the psychological 3,900 level. Simpler’s traders expect to see indecision from both the bulls and the bears, as this could be the point of the next big move of the market.

At the bell, the bulls were able to defend the 3,900 level… for now. 

Another down day for the stock market

Both the Nasdaq and the S&P 500 were slightly negative to close the day. The S&P 500 futures closed down .41%, losing 16.25 points, while the Nasdaq futures closed down 0.74%, a loss of 89 points. The Dow was down 180.46 points, losing .58%.