Tuesday, January 12, 2016

Bulls Attempt A Defense

It wasn't a decisive victory for bulls, but at least buyers were able to push markets into a higher close. For some markets, the end result was still indecision as to whether this marks a potential swing low. And in all markets, volume was lighter than yesterday.

The Russell 2000 was the index which had taken the biggest relative loss, and consequently, had the most neutral finish with a wide-range day doji. There was a small uptick in technical strength, with the exception of relative performance against the Nasdaq (and S&P), which ticked lower.


The S&P had the best return on the day, gaining nearly 1%.  Yesterday's spike low will now mark a buying opportunity on weakness (at least until the lows are taken out).


The Nasdaq too finished with doji (like the Russell 2000), although it did close with a 1% gain. Technicals show modest uptick, but nothing to get too excited about.


The Percentage of Nasdaq Stocks above the 50-day MA has reached August swing lows, watch for a positive divergence with a higher low in the breadth metric and equal or lower low in the Nasdaq.


Nasdaq Bullish Percents are also close to August/September lows and a good chance a key low is near.


Tomorrow has a chance to build on today's gain, but bulls will want to see what happens when sellers return. Watch breadth metrics closely, these will give the best confirmation if a swing low is in play.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I also trade on eToro and can be copied for free.
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