Market Indecision

Between's Apple disappointing sale guidance, HSBC's 35,000 employee layoff plan, and lingering Coronavirus, it was looking like markets were heading towards a clear downward session - but this was not the case. Instead, there was a large degree of indecision as existing holders were reluctant to sell but few buyers were willing to step in to defend these elevated prices. On a pure technical view, markets look well positioned for further gains, the Russell 2000 in particular, but the Coronavirus  hasn't yet revealed its full impact on economic supply chains or consumer confidence.

The key trigger (for me) remains the Russell 2000. The channel breakout remains valid, even if the index hasn't yet blown past 52-week highs. Technicals are good, although On-Balance-Volume is on the verge of a 'sell' trigger. Relative market performance remains very poor and is a long way from a new 'buy' trigger.

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Rallies Defended

There wasn't a whole lot to Friday's action, but the one thing which was important was the successful defense of the Russell 2000 channel breakout. As a bonus, the Nasdaq is running alongside channel resistance and is ready to accelerate higher. The S&P is caught in the middle of its channel and Friday's action didn't change anything.

The Thursday breakout in the Russell 2000 gave up nearly 0.5%, but didn't reverse any of the earlier bullish technical picture.

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Breakouts Extend

The S&P extended its move above 3,330 resistance on higher volume accumulation. There is still room to run to channel resistance on net bullish technicals.

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Tech Indices Follow Through Gains

It was a good day for all markets, but as the Nasdaq was leading other indices with its breakout it was important for this move to hold. It did so with little concern, helping to boost an already strong technical picture. The 90% threshold of historic overbought action won't be reached until the index tags 9,706. However, the Nasdaq has made it to the 85% marker - a point where profit taking and/or selling covered calls should be considered; the last time this occurred was in January 2018.

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