Tuesday, March 31, 2015

Inside Day Keeps Things Open

Large and Small Caps traded inside yesterday's range, closing lower against yesterday's higher close. While yesterday's buying hasn't been totally eliminated, it will have put a dent in bullish confidence. Watch for follow through selling tomorrow.

While the S&P closed above the 20-day and 50-day MA yesterday, today it closed below each of these MAs.  Technicals only require a stochastic drop below the bullish mid line to turn net bearish. Relative performance against the Russell 2000 also accelerated downwards.

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Monday, March 30, 2015

Small Caps pressuring 'Bull Trap'

The Dow had the best of the action, with higher volume buying to close the day out. The index closed above the 20-day and 50-day MAs. The next challenge is to push above 18,100; which is the 'bull trap' and the recent spike push to 18,205.

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Sunday, March 29, 2015

Potential for Trading Range

Indices trading near support, but Friday's close didn't do enough to pull away from support. Monday offers a chance for bulls to make back lost ground, although given this is the second run at support for March there is a higher chance of support failure. In addition, Friday's buying volume was lighter.

The S&P continued its under-performance relative to the Russell 2000 and Nasdaq. The 20-day moving average is an opportunity for shorts to attack should bulls be able to mount some follow through from Friday. Otherwise, a cut below Friday's open at 2063 could open the flood gates for bears. Bulls will really need a move above 2095 for confidence to return.

The Nasdaq was able to defend its 50-day MA and with Intel looking to takeover Altera there may be room for further gains. As with the S&P, Friday's trading volume was light. If bulls do make an appearance on Monday then watch if bears turn up the heat at the 20-day MA.

The Russell 2000 is probably in the worst state. It was looking good to lead out gains for other indices to follow, but Wednesday's selling generated a 'bull trap' which could hurt it given the strong form it has enjoyed through 2015. It did do enough to close above its 20-day MA, but not enough to start challenging the 'bull trap,' which will take a close above 1,243.

It's looking tough for bulls. As of Friday's close I am long the Nasdaq 100 in my etoro account, so if there are early gains I would be looking to move stops to breakeven and give the trade some room to run. One possibility is a bearish head-and-shoulder reversal, which would mean a rally back to 'bull trap' lows (where available). I'm using etoro as an experiment, and wouldn't recommend it for investing (the spreads are painful), but it's a good way to get into trading without risking large sums of money. If you are interested in trading U.S. and European indices, FX, or precious metals, then you can join me every Friday on Tradercast from 13:30 GMT to 15:30 GMT.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I do a weekly broadcast on Friday's at 13:30 GMT for Tradercast, covering indices, FX and gold, silver and oil - all are welcome! You can read what others are saying about Zignals on Investimonials.com.

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Thursday, March 26, 2015

Nasdaq finishes on 50-day MA

There was some carryover from yesterday's heavy day of selling. My tracking of ETF alerts for Zignals didn't mark a trend reversal for ultrashort ETFs, only ultralongs; suggesting yesterday's selling was primarily driven by profit taking and not shorting activity. Today's action brought indices closer to support, which slowed the rate of loss.

The S&P closed with a neutral 'spinning top' on lighter volume. The 50-day MA didn't offer much support, but the low at 2,039 remains valid.

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