Weekly review

I have already commented in my Trade Ideas post how today's buying had all the makings of a short covering day, with little in the way of substance buying. The net result for the week was the leave the markets in a broad quagmire of volatility with support and resistance broadly defined. The index which probably has the most benefit - purely on the basis it is the most beat down - is the Russell 2000:



Large caps played more to form with the Dow finishing the week with a picture perfect test of the 200-day MA. The Dow is a good example of how Bears currently run the show; dips in May, June and early July were bought up quickly - but the later July dip was sold off at the 61.8% Fibonacci retracement. So how will the current rally fare (61.8% retracement at 13,225)?



Unfortunately, the S&P has fewer redeeming qualities as the 200-day MA is support no more and the 50-day MA did its best to contain an earlier rally:



The Nasdaq is another index to feel the wrath of the 50-day MA as resistance. Note the early attempts of a rally in Money flow were quickly quashed as selling overwhelmed the index:



Given the deeply oversold nature of the indices I suspect markets will enter an awkward sideways period as traders feel out the root canal of the week's lows as potential long standing support.




Popular posts from this blog

Round 2 for the bearish "black" candlestick in S&P and Nasdaq

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Friday's gap downs bring indices close to support. Semiconductor Index at 200-day MA.

Image
Friday's big gaps lower have the potential to become breakdown gaps, but for now, the near term oversell has for a possible move into the gap price vacuum. The index most likely to achieve this in the coming days is the Russell 2000 ($IWM). The Russell 2000 ($IWM) finished with a neutral doji, just above its 50-day MA and in a thick band of support between $207.50 and $210 marked by the summer swing highs. Technicals have followed price action with new 'sell' triggers in On-Balance-Volume and ADX, but intermediate term stochastics haven't reached the mid-line that is typical support in bull markets. Aggressive bulls can look for a move to test the underside of the 20-day MA. The S&P was unable to hold its 50-day MA on Friday's open, and instead found itself toying with the May swing high. More significant support is likely to be found around 5,265, so if there is an undercut of Friday's low then this will be the next port of call. More concer...
Read more

Russell 2000 ($IWM) Records Accumulation Day As Technicals Turn Net Bearish

Image
Options expiration will have clouded the volume picture, particularly for the S&P, but it was a day for buyers to build some momentum into the Santa rally. The FOMC rate statement put a huge dent in prior rallies, with the S&P now having to deal with a 'bull trap'. Although it was the Russell 2000 ($IWM) that finds itself most on the back foot having undercut its 50-day MA, and now looking at the 200-day MA as its next test. It was the only one of the lead indices to turn net bearish in supporting technicals; the November breakout gap is no more. What's more likely is a new trading range, bound by November highs, with the $205 level a possible support level.
Read more

Archive

Show more