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Showing posts from December, 2014

Have a Great Christmas and New Year! Small Caps - It's Over To You....

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I will be keeping posts to a minimum until the New Year. Friday finished with a bit of a high volume flourish, which added a nice gloss to Thursday's big gains. The Russell 2000 managed to go one step further with a breakout. Watch this index over the coming days; if it can hold the move it will bring other indices with it. The Russell 2000 has under-performed (relatively) all year, and if bulls are to maintain a broader market rally into a sixth year then the Russell 2000 will have to do most of the leg work. As an important side note, the Russell 2000 turned net bullish technically. The flip-side is to watch for a 'bull trap', but even here, this might instead widen the recent trading range handle as major resistance lives at 1,210/15 not at 1,190.

Relief Bounce in Markets

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Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue. The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.

Market Selling Intensifies

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It ended up a roller coaster ride with markets rallying, then suffering losses to return indices to their lows. Volume rose in confirmed distribution, and many indices now sit inside Fib retracement levels - a good place to launch a relief bounce. The S&P finished just a few points above the 50% Fib level, with the 200-day MA near the 61.8% zone - and a more probable place for a bounce.

Further Selling, But More Likely

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The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.

S&P Breakout Support Cleanly Cut

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There wasn't much for bulls to work with by the time markets closed Friday. I was somewhat surprised to see the S&P give up 2,009 breakout support without too much of a struggle. It finished at its 50-day MA which is also near psychological support of 2,000. Volume also climbed in confirmed distribution. Monday offers another chance for a bounce, but there is growing supply overhead which has the potential to kill any sustained Santa Rally.

Late Selling Puts Pressure on Friday

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Thursday saw another attempt by bulls to make up the losses of the previous day, but bears didn't wait until the next day to attack. Instead, an afternoon assault pushed markets back towards their lows, setting up a situation for further losses today (Friday). Volume was light, and there is plenty of support nearby to work, but it doesn't look good if you want to be a buyer for the longer term.  If that's your goal, refer to my table below to identify market conditions best suited to do this. As for markets, the S&P inverse hammer looks ugly. A test of 2,009 today or Monday doesn't look unreasonable.

Yesterday's Recovery Wiped

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It looked a weak recovery, and today's action quickly exposed the nature of yesterday's buying. Volume was modest, as holiday trading continues to be a theme. Window dressing into end-of-year remains a bullish overhang, but there is no guarantee Santa will keep on delivering gifts. For the S&P, look to Fib retracements and 2,009 breakout support. Buyers may attempt another run at the index then.

Late Recovery Comforts Bulls

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Not sure what to make of today. The recovery didn't look like one based on merit and will be vulnerable to early morning weakness. The Russell 2000 went from trading range support to resistance as it finished with a bullish engulfing pattern. The strength of the pattern is weakened by the lack of oversold conditions. However, price action will always be dominant. A poor start will increase the probability for a retest of today's low.

Broad Selling

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Bears paid an early visit to Santa with a broad selling. The relative loss was minor, although volume climbed to register confirmed distribution. The Nasdaq delivered on the 'bear flag' breakdown, which will give shorts something to work with.  The index finished on its 20-day MA. but this hasn't played as support in recent months.

Honors Even - Indices Little Changed

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Not a whole lot to add to Friday's action. The only index to make ground was the Russell 2000: it's working toward a challenge of the November peak as part of a double bottom at 1,155.

Recovering from a Cold.

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Getting back up to speed after a head cold. Not a whole lot to report, despite the roller coaster ride in European markets yesterday. The S&P is primed to push to new highs, yesterday's doji left it pressuring resistance.

So Much For The Measured Pullback

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Yesterday had looked like markets were about to kickstart a move lower, but today put paid to that. Today has the appearance of panic buying, with traders not wanting to be left out of any opportunity to 'buy the dip'. The Dow went as far as to finish with a new closing high.

Confirmed Distribution

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It has been a while, but markets had their first day of distribution in weeks. The selling didn't clock up big percentage losses, although the Russell 2000 suffered the worst of the selling. There was still a case of post-holiday trading volume, but many indices are looking at 'bearish evening star' set ups. The Russell 2000 is just a shade above its 200-day MA, and probably a day away from the first Fib retracement.

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