Sunday, January 24, 2016

Nascent Swing Low

Friday did enough to confirm Wednesday's spike low as a potential Swing Low. Markets may look to rally back into the Oct-Dec trading range, but getting beyond that may prove more of a challenge. But until then, is plenty of room to support a low volume rally.

For the S&P, there is a thick level of support from 2,000 up to 2,025. Beyond that, things quieten with the 200-day MA, then a successive level of swing highs. Technicals remain in bears favour, although there was a 'bull' cross in On-Balance-Volume.


The Nasdaq is aiming for 4,900, but its first challenge is getting back to the 20-day MA.


Nasdaq breadth has fallen deep into swing low territory - comparable to 2011 - across all four metrics. A trade worthy low should be in place; weakness could be bought



The Russell 2000, the hardest hit of the indices, could form a 'bear trap' with a higher close on Monday.  The index was the first to record a 25% loss from 2015 high to recent low. The relative performance of the index remains down, but it's getting close to a bullish cross.


As a bonus, relative performance across different markets shows how far commodities have fallen.  Historically, they look to have reached a level which could mark a bounce (1999 lows). Global stock markets remain closer to overbought conditions, despite the losses already experienced.


Another sign of a bottom is the spike high in the number of NYSE stocks making new 52-week lows. While further lows (and new spike highs) are possible, a decent trading low should be in place.


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

Share on StockTwits

---

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 also trade on eToro and can be copied for free.

JOIN ZIGNALS TODAY - IT'S FREE!
 
f9229fcfd1b1390be00cfccc86c90349c93a4179bf4227457c