Narrow Trading Ranges Set Up New Breakout Opportunities

The past few days have seen markets shape narrow mini-trading ranges, each following breakouts from larger consolidations. Large Caps show this best

The S&P cleared a dual 4-month and 6-week consolidation before shaping the past 8-day 'flag'. Look for a break of 2,740 and a push to challenge the next swing high at 2,800 - although a test of this should be enough to go on and challenge all-time highs.

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Bulls Step In - Easing Bearish Concerns as Small Caps Breakout

Monday offered the bearish doji / swing high set up which had looked like it was going to create the 3-day bearish evening star set up across markets; this pattern did present itself Tuesday with the gap downs but today (Wednesday) saw rallies which were enough to close these gaps but not enough to negate the 'bearish evening star' setups. However, the bearish 'evening star' is typically a reliable setup and the lack of follow through lower suggests more upside is to come

The S&P had its breakout last week with supporting technicals all bullish, with the exception of relative performance. Despite this, look for a continuation of this rally.

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Bearish Candlestick Creep

Friday's action was a case of status quo but Monday pushed things more towards bear's favour; the series of doji and one gravestone doji are more in line with a swing highs. It does give a bulls a chance to negate what are typically bearish signals, particularly as these rallies are still relatively young.

The gravestone doji manifested itself in the Semiconductor Index. While today's action also marks a short term breakout it's looking more likely to be a swing high; look for a gap down tomorrow (to leave a potential bearish 'evening star').

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Friday Consolidation - Small Caps Ready To Lead

Not every day can be a headline day and Friday was one of those days. the only action of note was the breakout in the Nasdaq Summation Index. Technicals aren't fully bullish but the consolidation breakout should help the Nasdaq and Nasdaq 100.

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