Monday, December 22, 2014

Have a Great Christmas and New Year! Small Caps - It's Over To You....

I will be keeping posts to a minimum until the New Year. Friday finished with a bit of a high volume flourish, which added a nice gloss to Thursday's big gains.

The Russell 2000 managed to go one step further with a breakout. Watch this index over the coming days; if it can hold the move it will bring other indices with it. The Russell 2000 has under-performed (relatively) all year, and if bulls are to maintain a broader market rally into a sixth year then the Russell 2000 will have to do most of the leg work. As an important side note, the Russell 2000 turned net bullish technically. The flip-side is to watch for a 'bull trap', but even here, this might instead widen the recent trading range handle as major resistance lives at 1,210/15 not at 1,190.


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Wednesday, December 17, 2014

Relief Bounce in Markets

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


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Tuesday, December 16, 2014

Market Selling Intensifies

It ended up a roller coaster ride with markets rallying, then suffering losses to return indices to their lows. Volume rose in confirmed distribution, and many indices now sit inside Fib retracement levels - a good place to launch a relief bounce.

The S&P finished just a few points above the 50% Fib level, with the 200-day MA near the 61.8% zone - and a more probable place for a bounce.


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Monday, December 15, 2014

Further Selling, But More Likely

The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.


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Sunday, December 14, 2014

S&P Breakout Support Cleanly Cut

There wasn't much for bulls to work with by the time markets closed Friday. I was somewhat surprised to see the S&P give up 2,009 breakout support without too much of a struggle. It finished at its 50-day MA which is also near psychological support of 2,000. Volume also climbed in confirmed distribution. Monday offers another chance for a bounce, but there is growing supply overhead which has the potential to kill any sustained Santa Rally.


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Friday, December 12, 2014

Late Selling Puts Pressure on Friday

Thursday saw another attempt by bulls to make up the losses of the previous day, but bears didn't wait until the next day to attack. Instead, an afternoon assault pushed markets back towards their lows, setting up a situation for further losses today (Friday).

Volume was light, and there is plenty of support nearby to work, but it doesn't look good if you want to be a buyer for the longer term.  If that's your goal, refer to my table below to identify market conditions best suited to do this.

As for markets, the S&P inverse hammer looks ugly. A test of 2,009 today or Monday doesn't look unreasonable.


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Wednesday, December 10, 2014

Yesterday's Recovery Wiped

It looked a weak recovery, and today's action quickly exposed the nature of yesterday's buying. Volume was modest, as holiday trading continues to be a theme. Window dressing into end-of-year remains a bullish overhang, but there is no guarantee Santa will keep on delivering gifts.

For the S&P, look to Fib retracements and 2,009 breakout support. Buyers may attempt another run at the index then.


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