The S&P closed with an inverse 'hammer' on confirmed distribution. The MACD continued to expand on its weakness with On-Balance-Volume close to triggering a 'sell' trigger of its own. The 'bull trap' hasn't yet confirmed, but tomorrow could be the day we see this happen.
The Nasdaq wasn't quite a bearish with selling volume avoiding the distribution turn found in the S&P. If volume remains light on the next downleg, then a push to the 50-day MA may offer a buy-the-dip opportunity.
I had thought the Russell 2000 would have enough to make it to tag the 200-day MA before turning south. Instead, the index is struggling a little near rising channel support. The relative performance (against the Nasdaq) is perhaps the most bearish aspect to this index, but a loss of the channel could force a panic. Also note how Rate-of-Change deftly rebounded off the zero mid-line level between bull and bear market.
Not a great time to be buying, but the next move lower will give an indication as to how strong February lows are (which should be significant).
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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