Thursday's Market Minute: Stocks Stumble As Crude Oil Demand Tanks

Equity futures moved downward on high volume yesterday, yet the S&P, Dow, and Russell contracts have yet to show a significant breakout to either side since retreating from highs in early June. The only exception is the tech-heavy Nasdaq, which squeaked out new all-time highs on Monday but has since fallen back below the 10,000 level. A potential weak point is that momentum seems to be slowing as the /NQ’s daily RSI shows bearish divergence from price. The contract made all-time highs at 10296.25, but the RSI failed to surpass its level from the previous highs. Traders likely will be watching to see if the 9760 level will hold to the downside.

Elsewhere in the market, Crude Oil futures tanked -4.8% after a bearish EIA Petroleum report showed the third consecutive week of record-high inventories, and the extent to which Covid-19 will affect oil demand remains the big question for traders. Technicians may have noted that while /CL closed above its previous June highs on Monday, it is stalling near this level once again and could be forming a bearish double-top pattern. Furthermore, the daily RSI actually made a new low as prices rose, suggesting bearish divergence similar to the Nasdaq. Look out for possible support around the 252-day EMA near 35.70 on the downside, while a strong close above $40 would be important for bulls.