Other than a slight uptick in volume for the S&P, it was a relatively quiet day. The one index which hinted at a change was the semiconductor index. It had been trading in a sideways range which had drifted outside of its narrow, rising channel, but yesterday's close positioned it as a break of support. The 50-day MA is nearby to provide support, but with technical weakness expanding there is a strong possibility for a larger move down.
No posts for the next couple of weeks. Trading volume was light with tight action in Large Caps, but a little give in Small Caps. Existing trends in play until proven otherwise, anything else risks overplaying background noise.
Pointers to keep an eye out for over the coming weeks:
S&P remains on course to tag the 10% 200-day MA envelope (grey dashed line). Channel and/or 20-day MA support may offer pullback opportunities.
There was only one index at the races on Friday. Strong volume action, and the close above 'Head' resistance, suggests the Nasdaq breakout has finally taken. The 'Bull Trap' hasn't totally been negated, but Friday's action was a big dent in it.
Well, that selling didn't last long. Buyers didn't even wait for tests of nearby moving averages before buying - they just jumped in from the open and didn't look back.
The Nasdaq may have done enough to trigger a breakout, although the spike high at 4,399 has the potential to play as resistance. Given the way the MACD is going, I suspect we are going to get a 'sell' trigger here. This is not to day bulls can't keep this going, but I think there needs to be a greater shake of weak hands from their positions to get a break of 4,400 to hold.
Sellers had to return at some point, and Tuesday was the day they paid a visit. I was too consumed with Suarez's fine dining skills to do an update last night, but given the day ranked as a distribution day it's worth passing comment.
The most important action was found in the Nasdaq. The index had looked to comfortably break past resistance, only to see it finish below this resistance. A classic 'bull trap' requires a close above, then below resistance, but Tuesday's action was more a plain rejection of the breakout level as a support zone. The 'inverted hammer' on overbought short and intermediate term stochastics is a possible short entry with a break of 4,342 and an initial stop above 4,400. If going short, look to move the stop to around 4,369 on the first close below 4,342.