Tuesday, November 04, 2014

Late Rally Maintains Breakout Support for a Second Day

Today looked a lot more bearish on an intraday chart than it did on the daily chart. For example, the daily chart in the S&P closed with a bullish hammer, but as with any reversal candlestick, a 'bullish' candlestick is considered bullish when in an oversold market - and this is not an oversold market.  However, the rally did enough to maintain a close above 2,009.


On a intraday S&P chart, there was a rejection of the 2,010-2,012 level and 20-period MA, but there was support at the 50-period MA: these two MA's are converging and will resolve one way or the other tomorrow. A measured move down takes it back to 1,995, which also happens to be the breakout gap from the end of October.


The Nasdaq is also holding breakout support of 4,623. However, my preference is still towards a pullback into fib retracements.


The Russell 2000 hasn't a breakout to protect, but it will have the 200-day MA to lean on. What makes it more difficult is a flat-line in the 200-day MA, which lacks the direction to help determine direction of the next move.


The semiconductor index is also working towards resistance and a challenge of the 'bull trap'. If it can do this it will help the Nasdaq with its rally.


For tomorrow, look for bearish action in the first hour, but if buyers make an early appearance it could turn into a very good day for bulls given the lack of overhead resistance.

---

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
All Contributions Welcome - Thank You!

Follow Me on Twitter



Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. You can read what others are saying about Zignals on Investimonials.com.
JOIN ZIGNALS TODAY - IT'S FREE!
 
f9229fcfd1b1390be00cfccc86c90349c93a4179bf4227457c