NEW YORK (TheStreet) -- Last week's U.S. equities selloff led investors to fear markets had reached a tipping point. But this week, upcoming support levels in both iShares Russell 2000 Index (IWM) and SPDR Dow Jones Industrial Average (DIA) and underlying fundamental strength could revive confidence. Currently the three major indices are up by less than 1%.
After accelerating close to 10% since early April, SPDR S&P 500 (SPY) dropped over 2% last week, recording its worst weekly loss since June 2012. Equities started the week with fairly muted trade, and even showed strength on Wednesday as U.S. economic growth outperformed expectations in the second quarter, while first-quarter growth was revised higher.
Losses took hold of the market on Thursday and Friday, however, as disappointing employment figures, negative headlines in European financials, and more sanctions imposed on Russia led to selling pressure in equities and increased volatility in iPath S&P 500 VIX ST Futures ETN (VXX).
Although analysts speculate U.S. equities have gone over a cliff and could correct lower by 10% or more over the next few months, both price action and fundamental factors do not support those claims. Falling prices in the Dow Jones Industrial Average and Russell 2000 are quickly approaching support levels that should lead to buying pressure.