Thursday, October 20, 2016

Mini-Bearish Wedges in Lead Markets

The last few days have seen little movement in key markets. The one potential development to look to resolve tomorrow or Monday are rising wedges in certain markets. The advantage bulls have is that if markets can push above wedge highs (which are close), shorts will be squeezed in a buying scramble.

The S&P has a created a small, rising wedge off a larger rising wedge from September. The 20-day and 50-day MAs lend additional overhead resistance as does higher volume distribution for the index today (although the trading range for the day was very narrow).

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Tuesday, October 18, 2016

Neutral Day for Indices

Markets were unable to build on premarket gains, but did manage to finish the day where they started.

The S&P closed with a narrow range doji, a doji which finished below Friday's bearish black candlestick. The pattern of the last five days is playing more in bears favour, but with support around 2,115 holding there is still a chance a broad swing low is in play; confirmation comes on a move above 2,160. Trading volume sided with bulls on a confirmed accumulation day.

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Sunday, October 16, 2016

Late Selling Leaves Markets at a Crossroads.

The follow through from Thursday's buying burned out after the first hour of Friday's trading and Friday closed back at Thursday's close. Where Thursday's action had set up for upside follow through, Friday's 'inverse hammer' is offering the reverse.  The question is how strong the respective buying and selling which created the spikes from Thursday and Friday are? Monday is likely to start with a test of Thursday's buying. What happens after the first half hour of trading will set the tone for the rest of the day.

The S&P is trading below 20-day and 50-day MAs. Thursday's selling was greater than Friday's buying which is another tick in the bear column. Technicals are all negative. The only positive was the relative out performance of the index to the Russell 2000.

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Tuesday, October 11, 2016

Sellers Hit Out

Today had the look of a decisive break down, but the last such breakdown from September's Brexit vote had a similar guise, but it failed to follow through. Volume climbed to register as another distribution day, the second (third for the S&P) such day since the last accumulation day. Tomorrow could be the decider, but it needs to break down right from the open - otherwise the agony will continue.

The S&P is back showing net bearish technicals. However, the index continues to outperform the Russell 2000.

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