We have the Russell 2000 caught in a long term trading range, and despite registering a gain it hasn't changed the larger picture in favor of either bulls or bears. The only index at a point of inflection is the S&P. After breaking below the bearish wedge it now finds itself rallying back to former support turned resistance. There are flickers of good news; intermediate stochastics returned above the bullish mid-line and Friday's close finished above the 50-day MA.
The tough start to the week has seen much of this lost ground recovered, but getting to challenge highs is still some way off.
The Nasdaq is at least approaching its 20-day MA as technicals see a small recovery with a new On-Balance-Volume 'buy' trigger. The index did successfully defend support connecting the July and August swing lows, although it did suffer a relative performance loss against the MACD.
After weeks of gains which amounted to a series of low volume rises, we now find a more concerted action to the downside with gaps which may not get filled easily.
In the case of the Nasdaq we had the August breakout stall and reverse with a move below breakout support. I have drawn a secondary support line connecting the last swing lows. This can be considered support until proven otherwise. Aggressive buyers may consider a positiom here, but the spinning top doji is a more neutral candlestick - suggesting price action could go either way.
Markets aren't exactly powering higher but there is an attempt to develop some form of swing low. The Nasdaq has the clearest opportunity. The last couple of 'white' candlesticks have developed at 20-day MA - well above closest (breakout) support. Add to that, we have 'sell' triggers in the ADX and MACD, offset by On-Balance-Volume and strong momentum from Stochastics. I'm liking the action even if trading volume could be a little higher.
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