The S&P tagged the 5% envelope band of 200-day MA, an area which will give bulls a chance to mount a snap back rally to the 200-day MA, and a place where long term buyers can look to buy value in the market.
The Russell 2000 was one of the better indices on Friday. There was a sharp jump in relative performance against Large Caps and Tech indices., which combined with the "Accumulate" trigger, could offer a longer term (bull) trade. Of the indices, it finished Friday with a 'doji'; one of the few able to finish the day near where it started.
There was no such respite for the Nasdaq. And having only recently breached the 200-day MA it's not in an "Accumulate" zone either. While it will likely benefit from any spill over buying (should this happen on Monday), there may be another leg of selling still to be had here.
Nasdaq breadth metrics haven't entirely reached a bottom zone. The Percentage of Nasdaq Stocks above the 50-day MA finally reached a zone often associated with a trade-worthy bottom, but the Percentage of Nasdaq Stocks above the 200-day MA, Summation Index, and Bullish Percents still have room to run before they get there.
And the Semiconductor Index remains in free-fall.
Volatility traders finally have something to celebrate. This Monthly chart suggests this only the start of the selling.
While there is a good chance for a bounce on Monday, few will expect this rally to last. Those with patience may be rewarded, but watching the day-to-day changes will probably strike fear into many!
You've now read my opinion, next read Douglas' and Jani's.
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.
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. 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.
JOIN ZIGNALS TODAY - IT'S FREE!