Small Caps Remain Most Under Pressure From Sellers
With a new month we have a fresh review of the monthly investor watch signals; the tables at the very end of this article show the current relationship of the indices to their 200-day MA. The S&P and Nasdaq are still in the 10% zone of historic weak action; the latter back to 1950 - the former to 1971. The Russell 2000 is still well inside the 1% of historic weak action and today's action confirmed this.
The Russell 2000 took a near 7% loss and gapped down from its swing high; this gap - if it becomes a true breakdown gap - cannot close, so it does establish a risk:reward marker for shorts to work with and a resistance line to define a sequence of higher highs when this turns into a bull market. The question now is whether it will test the March swing low or make a new higher low? To add to the misery, selling volume increased as new distribution was registered - again, one which points in favor of short trades.
You've now read my opinion, next read Douglas' blog.
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Investments are held in a pension fund on a buy-and-hold strategy.
The Russell 2000 took a near 7% loss and gapped down from its swing high; this gap - if it becomes a true breakdown gap - cannot close, so it does establish a risk:reward marker for shorts to work with and a resistance line to define a sequence of higher highs when this turns into a bull market. The question now is whether it will test the March swing low or make a new higher low? To add to the misery, selling volume increased as new distribution was registered - again, one which points in favor of short trades.
The S&P also flagged a gap down as we establish the range bounds for either a new higher or a new lower low. On-Balance-Volume, ADX and Stochastics all favor bears while the MACD sides with the bulls.
Similarly, the Nasdaq also has the range bound support and resistance levels to work with; again, a bull market on a break above resistance and a continuation of the bear market on a loss of support.
While the Bullish Percents have also signaled a top at the 50% boundary. But, unlike the index, supporting technicals are bullish.
Going forward, we have the initial basis for a higher high and higher low sequence or continue its descent into a retest of lows (and maybe worse).
You've now read my opinion, next read Douglas' blog.
---
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Investments are held in a pension fund on a buy-and-hold strategy.
