The S&P worked off the 20-day MA in a near 1% gain on higher volume accumulation. It still has room to run before it challenges 2,075 and the bull trap, plus it will need to reverse the MACD trigger 'sell' in the process, but today's action has rreduced the risk of a panic sell off.
The Nasdaq registered accumulation with a bullish hammer off converged 20-day and 200-day MA. It too has a MACD trigger 'sell' to reverse, but if it can push above stiff resistance around 4,900.
Nasdaq breadth is still angled in favour of bears though; Nasdaq Composite Bullish Percent Index as an example.
Along with Nasdaq Summation Index:
The Russell 2000 was able to dig in off its rising channel, which is also near 20-day MA support. I'm still liking convergence of 200-day MA and channel resistance as a shorting opportunity (I have an eToro order lurking there), but it has to get there first. Technicals favour bears too.
For Wednesday, look for further upside as shorts active over the last couple of days are forced to cover their positions. Fresh buying from bulls isn't likely until markets take out March/April highs, but all markets are very close to doing this. Until then, it's up to shorts to cover and for bulls to hold on to existing positions, and/or maybe add to them.
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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