Fallondpicks.com: Weekend commentary

Newsletter, Members Click HereWell, it was a week when the large caps [Dow and S&P] broke to new highs and (more importantly) were able to retain those highs. Also benefiting were small cap [Russell 2000] stocks which pushed past 735 resistance (5-month resistance) and held these levels into the weeks close. The tech averages [NASDAQ and NASDAQ 100] still have work to do to breach resistance, the semiconductor index struggled the most in the face of net gains for the markets - shaping a new, mini-downward channel out from the previously (larger) upward channel. However, in terms of relative market strength - Tech leads the way {Tech > Small Caps > Large caps = net bullish and strengthening}.

Technically, there was a fresh 'buy' trigger in the Russell 2000 and new highs in on-balance-volume for the Dow and S&P.

Market internals [$NASI, $NAA50 and $BPCOMPQ] were interesting because of their mixed messages; the $BPCOMPQ pushed beyond resistance of 48, reversing a 'sell' trigger in its Ultimate Oscillator - but not a similar trigger in its MACD. The $NAA50 looked ready to blast past 1,250 resistance, but again it has found trouble at this important resistance level - technically, it too remains weak. The $NASI regained the 5-day EMA and its Ultimate Oscillator found support at its Jun-Oct bullish divergence, but its MACD is on a 'sell' trigger which looks to be increasing in bearish strength. Finally, volatility is only a few ticks away from support at 16 (major support at 14). The volatility cat-in-the-bag was released in May and I suspect the period of low volatility which had been running from early 2003 is close to over.

For followers of the Ticker Sense Blogger Sentiment Poll, I remain bearish over the next 30-days.


Popular posts from this blog

Upcoming "Death Cross" for Russell 2000 ($IWM)

Image
There was some modest buying today from the open, but volume was light and markets are below trading range support established during the latter part of 2024. It's hard to see where the buyers are going to come from given the chaos of Trump. I should add, I listened to Josh Brown's The Compound podcast and he showed an interesting chart of market returns in April-May in the year following a strong return in markets; in essence, selling to pay capital gains tax. Given the precarious nature of markets, and the possibility for this seasonal factor to play out, it's likely we have a couple more months of downward action before value buyers return. If we look at individual markets, the Russell 2000 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
Read more

Friday's gap downs bring indices close to support. Semiconductor Index at 200-day MA.

Image
Friday's big gaps lower have the potential to become breakdown gaps, but for now, the near term oversell has for a possible move into the gap price vacuum. The index most likely to achieve this in the coming days is the Russell 2000 ($IWM). The Russell 2000 ($IWM) finished with a neutral doji, just above its 50-day MA and in a thick band of support between $207.50 and $210 marked by the summer swing highs. Technicals have followed price action with new 'sell' triggers in On-Balance-Volume and ADX, but intermediate term stochastics haven't reached the mid-line that is typical support in bull markets. Aggressive bulls can look for a move to test the underside of the 20-day MA. The S&P was unable to hold its 50-day MA on Friday's open, and instead found itself toying with the May swing high. More significant support is likely to be found around 5,265, so if there is an undercut of Friday's low then this will be the next port of call. More concer...
Read more

"Dead Cat" Bounce or Something Better?

Image
It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.
Read more

Archive

Show more