All major U.S. stock indices finished in the red last week, led lower by the tech-heavy Nasdaq 100, which lost 2.8%. Throughout the past month, I have been saying that as long as technology continued to outperform, the overall market was likely to continue grinding higher. Accordingly, I view last week’s relative weakness by the Nasdaq 100 as an early warning of potential weakness in April.

All sectors of the S&P 500 fell last week, with financials, technology and industrials hit hardest. The energy sector held up relatively well.

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My own asset-flow-based metric continues to indicate that this beleaguered sector is historically under-invested. This suggests an emerging opportunity to overweight the sector in upcoming months and look for buying opportunities in undervalued energy assets.

Dow Theory Non-Confirmation Remains in Force

In the March 2 Market Outlook, I pointed out that the new closing high in the Dow Jones Industrial Average on Feb. 20 had not yet been confirmed by a corresponding new closing high in the Dow Jones Transportation Average. I said that, according to Dow Theory, “As long as the transports do not establish a new closing high above 9,217, the sustainability of the broader market’s recent strength will be suspect.”

Almost a month later, not only did a close above 9,217 never materialize, but the Dow transports are now threatening to decline below their 2015 closing low at 8,656. 

A close below 9,217, corroborated by a close below 17,165 in the Dow industrials, would suggest that a significant peak is in place in the broader market.

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Nasdaq at Critical Inflection Point

In the Feb. 17 Market Outlook, I discussed an emerging breakout in the Nasdaq 100 from about three months of sideways investor indecision, which targeted a run to 4,600 as long as the upper boundary of the indecision area at 4,347 loosely held as underlying support.

The next chart shows that the index subsequently stalled twice near 4,480 before collapsing below 4,347 at the end of last week, and is now testing its October uptrend line at 4,295.

This represents an important decision point for the index. The advance that began in October must aggressively resume if the 4,600 target is to remain valid. Conversely, a sustained decline below 4,295 would indicate that the market has collectively changed its mind on direction, negate the target and suggest that a significant peak is in place at the March highs.

Volatility May Play a Crucial Role This Week

I am paying particularly close attention to market volatility this week, as indicated by the Volatility S&P 500 Index (VIX). This week’s action should give us an indication of whether investors are complacent enough to fuel a rebound from support or fearful enough to extend last week’s decline.  

The VIX finished last week below its 50-day moving average at 16.13. Over the past several years, periods in which the VIX remained below this moving average, indicating investor complacency, have coincided with stock market advances. Sustained moves above the 50-day moving average have been indicative of significant increases in investor fear that helped trigger market declines.

As long as the VIX remains below 16.13 this week, I will view it as an indirect indication that underlying support in the Nasdaq 100 is likely to hold and the index is likely to resume its uptrend. A sustained rise above 16.13 would be expected to coincide with a decline below support in the Nasdaq 100, which increases the odds of an April sell-off.

The stock market began this week at a critical near-term decision point from which it must decide whether its October 2014 advance is still intact, or if a more significant pullback is emerging from the March highs. A pullback below 4,295 in the Nasdaq 100 on a coincident rise above 16.13 in the VIX would suggest the latter.

This article originally appeared on PofitableTrading.com: Market Reaches A Critical Inflection Point