U.S. stocks closed lower on Friday, with the selloff eroding much of the week’s gains. Equities were pressured by a decline in Apple, after cautious analyst reports cast doubts about iPhone sales. Moreover, the yield on the 10-year US Treasury is rising and is close to 3%, a level which has previously caused a bearish equity market reaction. Rising bond yields offer alternatives for funds looking to allocate cash and improve performance, so can be negative for equities. On a positive note, earnings season has started strongly with 80% of the S&P500 companies reporting having beaten forecasts. A number of influential companies will be reporting earnings starting with Alphabet today after the bell, followed by Facebook, Amazon and Microsoft later in the week
On the daily chart, the S&P500 (SPX) is testing the neckline of the inverted head and shoulders pattern. A break below support at 2600 will see further declines towards the 68.1% retracement and 200MA confluence near 2615, with 2635 providing some support. A bullish move above 2680 will likely see another test of the falling resistance trend line at 2705. A break of the trend line is needed for a continued bullish move to the pattern target at 2800.
On the daily chart, the NASDAQ100 (NDX) has broken a rising support trend line and is testing a major zone of support at 6650. A break of this support will see continued declines towards the 50% retracement at 6585, followed by 6525, before heading for the 200MA. However, a bullish move above 6755 will open the way for a test of the highs at 6870.