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.
Fallond
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.
Fallond
