Monday, April 17, 2017

Markets Rally, But Still Work To Do.

A positive response to Friday's selling helped erase those losses, but for many indices it wasn't enough to recover support or reverse technical 'sell' triggers.

The S&P is on the verge of a 'death cross' between 20-day and 50-day MAs as the rally finished just below the 50-day MA. The consolidation channel remains in play and this should see higher prices in the latter part of the year, but for now, it's drifting down in a relatively controlled manner.


A second 'bear trap' could be in play for the Nasdaq as the index did enough to recover its 50-day MA. Aggressive players could look to go long with a stop on a loss of 5,805 - anticipating a breakout of 5,930 in the weeks ahead.


The Russell 2000 saw a 1% gain which brought the index back to rising support, but not enough to return above it. The two-bar paired reversal is another long opportunity with a stop on a loss of 1,345.


The chart which is the most interesting is the VIX:VXN relationship. Past spikes in the relationship between the two volatility indices and supporting stochastics suggest a 'strong buy' signal. Today's signal is perhaps the clearest buy signal for long-side traders since last November and June.


While technicals remain weak for Tech Indices, there is perhaps enough from a recovery of the 50-day MA and the VXN:VIX relationship to offer a traders 'buy' trigger. Other indices aren't as well placed, but all indices could benefit if the Nasdaq and Nasdaq 100 gain traction.

You've now read my opinion, next read Douglas' blog.

I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for "fallond".

If you are new to spread betting, here is a guide on position size based on eToro's system.


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Dr. Declan Fallon is a blogger who trades for fun on eToro and can be copied for free.
. I invest in my pension fund as a buy-and-hold.
 
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