Daily Market Commentary: Selling Continues, S&P Down at 50-Day MA, Russell 2000 Fails To Hold 20-Day MA

Just a quick update as I didn't do a post after the market close yesterday.  Selling continued to drive markets lower, confirming a large negative divergence in Nasdaq breadth (Percentage of Nasdaq Stocks above 50-day MA) with increasing technical weakness.


The S&P didn't escape the wrath of sellers, but does at least have a combination of 50-day MA and former channel support to lean on.  If there is a buying opportunity for a bounce, then the S&P (SPY) is the place to look.


The Russell 2000 fared less well. It was unable to hold its 20-day MA as support and is caught in a price void with next support down at horizontal support and 50-day MA at 954.


For Thursday, look for bounce opportunities in the S&P.  It has the easiest risk:reward calculation (break of channel support, target upper channel). There is also likely to be demand around 1,600 too.  Other indices may rally too, but it's harder to identify where solid support may lie (and resistance is more prevalent).

---

Follow Me on Twitter

Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

JOIN ZIGNALS TODAY - IT'S FREE!

Popular posts from this blog

Markets attempt a swing low for the seven day decline

Image
It looks like we have completed a zig-zag retracement for indices, with the Nasdaq and Russell 2000 finishing the day with a second doji for the 'zag' to match the intial doji of the 'zig'.  There were additional support levels for indices to use too.  For the Nasdaq, today's 'dragonfly doji' also has the potential to form a bullish harami doji - building off the 20-day and 50-day MAs. There was a 'sell' trigger in relative performance against the Nasdaq, along with 'sell' triggers in the ADX and On-Balance-Volume. 
Read more

Low volume selling after Russell 2000 breakout

Image
Yesterday finally delivered the long awaited breakout in the Russell 2000 on higher volume accumulation.  Today saw some low key selling on lighter volume, but the selling was not accompanied by distribution. The Nasdaq still offers net bullish technicals, but today's selling kicked in on the test of its 200-day MA. Yesterday's buying did count for accumulation. 
Read more

Minor losses pressure Thursday's reversal attempt

Image
I was looking for more from Friday's trading action as sellers were able to prevent buyers from gaining any traction over the course of the day.  A soft open got softer as the day progressed and the week finished with markets now looking vulnerable to a gap down open on Monday.  If there was a positive it was that selling volume was light, but there was further technical degradation by the close. This was perhaps hardest felt in the Russell 2000 ($IWM), which sold off by less than 1%, but there was enough weakness to see a 'sell' trigger in stochastics to turn technicals net bearish for the index.  There is a support level around $192.85 which needs to hold if the index is to continue a sequence of higher highs - higher lows from the February bottom.
Read more