Monday, February 08, 2016

Sellers Start Day, Buyers Finish It

Tech averages had the weakest start, Powerful gap downs had set things off, but buyers were able to make a comeback into the close. However, morning gaps remain. Volume climbed to register as distribution, which for the Nasdaq was the second day of distribution in a row.


The Nasdaq 100 is on the fiftth day of selling in a row. The August swing low wasn't fully tested. Bulls will be looking for a bullish 'morning star' where today's candlestick 'hammer' is followed by an opening gap, then a rally for the rest of the day. Should this emerge, then a move to test 4,300 is next. If there is a weak open, then any chance for a bullish 'hammer' based on today's action is significantly weakened.


Losses in the S&P, while comparable to the Tech indices, didn't see a loss of January's lows.  Today's spike low did fall inside the range of January's spike low. This will offer grounds for a positive response tomorrow; today's lows will likely see a cluster of stops.


The Russell 2000 has been leading the move down, although the past few days have seen a positive relative response (against Tech averages).  However, today's low marked a new low for the year. Additional losses has the potential to pull other indices down with it given this leadership role.


Tomorrow's action will be heavily influenced by pre-market action.  If there is a gap down, then whatever confidence built by bulls today will quickly dissipate. A gap higher, and there will be a scramble between value buyers and short covers.

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