Heading into the market open, some economic data was set to be released, but before we get into that it is important to note the previous session’s price action into close. The buying pressure into the close yesterday came as a surprise. It would be important to monitor how the bears react overnight in the S&P 500 and Nasdaq futures. Well, they were not very apparent, leaving the door open for the bulls. When the Non-Farm Payroll came out, the data was not the best. The reaction was positive, sending the market even higher, before the opening bell.

As the opening bell rang, both the bulls and bears battled it out, but the bears ended up taking control of the market early, sending the market back lower. The report on Non-Farm Payroll(NFP) indicated that our economy is producing jobs slower than it has over the prior several months. This news is not directly what caused the big flush of the day, but it definitely contributed to the fire. After some selling was over by the bears, the bulls were able to provide enough buying pressure to send the market back to the 50-day simple moving average (SMA). If you remember the importance from this level was explained in the article titled “Fourth Consecutive Market Down Day To End Month”.

In that article, we discussed that in order for bulls to take control of the market fully, they would need to break through the 50-day SMA. When the opportunity arose on Wednesday, they failed to do so. When the opportunity came about again today, the results were the same. There was strong selling shortly after the bulls failed to break this level. There was also a news event that served as a catalyst, accelerating the pressure the bears put on.

Just as the market was consolidating near the high of the day, near the 50-day SMA, Russia announced it would be suspending the Nord Stream gas pipeline to Europe indefinitely. This news shocked the markets because of its impact on the oil industry and the economy. 

For the remainder of the day, there was strong and consistent selling pressure by the bears. The selling was directional, with no cover pops to be found. 

During the last hour of the day, a brief moment of consolidation appeared to show signs of exhaustion from the bears. Ultimately, the bulls did not have enough gas in the tank to make a significant move. The later parts of the final hour provided more downside movement in which the bears quickly brought the price back towards the psychological level of 3900.

At the close, both the Nasdaq and the S&P 500 futures were negative in a big way. The S&P 500 futures closed down 1.08%, losing 43 points, while the Nasdaq futures closed down 1.47%, a loss of 180 points.