Wednesday, May 04, 2016

Low Volume Selling

Today gave an inclination that selling could be slowing. Markets did experience modest losses, but these came on low volume and support is available for some indices.

The S&P has bearish MACD, On-Balance-Volume and +DI/-DI signals to contend with, but does have converging support at declining trend and then the 50-day MA.


The Nasdaq is caught in a no-mans land between 50-day and 200-day MAs and horizontal support. Today's action was tight, which if there is a gap higher tomorrow would set up a possible bullish morning star. and potential swing low.


The Russell 2000 has drifted back to rising channel support. It's a good place to look for a bounce, although a spike low down to the 50-day MA would be a good alternative intraday opportunity.


The index most in trouble is the Semiconductor Index. Selling has undercut the 200-day MA but this may be an oversell generated from the sharp breakdown.  Next support is down at 615, but a return above the 200-day MA might be enough to create a swing low.


Look for early strength to set up a swing low. It may not be the absolute low in the decline, but it could be nice 2-3 day long trade.

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

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

 
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