Tuesday, May 03, 2016

Sellers Keep The Pressure On

A weak start didn't follow through lower in afternoon trading, instead there was an attempt to defend Friday's lows. However, this defense didn't do much to push indices away from this support.

The S&P experienced higher volume distribution, but is enjoying a relative strength gain against the Russell 2000.


The Nasdaq undercut the 50-day MA, also on higher volume distribution. Technicals are all net bearish with the January-March neckline next up to play as support. Should this undercut into this consolidation, then a retest of February's lows come into play.


The Russell 2000 took the biggest loss on the day, bringing the index back to rising channel support. The index undercut its 200-day MA and is on course to challenge the 50-day MA. To add to bulls troubles there was a bearish cross of the +DI/-DI.


Tomorrow is set up for bearish follow through with the Russell 2000 weakest of the indices. Should bulls make a positive start, then the S&P will be the index to watch as money cycles from speculative issues to more defensive ones.

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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