Tuesday, November 17, 2015

Sellers Reverse Early Gains

It was going to be too much for bulls to follow yesterday's gains with a repeat day, but they were unable to maintain what gains they had achieved by the close of business. This translated into bearish 'gravestone' doji for many of the indices. If true, then be wary of weakness off the open, as this may not reverse after the first half-hour of trading (an intraday reversal point).

The S&P has the 'bear trap' to work with, and unless the 2,019 swing low is breached the 'bear trap' remains valid. Volume climbed to register as distribution, and the 200-day MA was tagged as resistance. However, relative performance remains good.

The Nasdaq actually managed a small gain, but it too finished with a bearish 'doji'. Unlike the S&P, the 200-day MA is playing as support, and it has 4900 support to lean on too. Bulls may get the most joy here tomorrow.

The Russell 2000 registered a small loss as it trades around its 50-day MA. Declining former channel support is available to work with. Technicals are mixed, but intermediate term stochastics [39,1] are close to testing mid-line support. Short term stochastics are not yet oversold, and it would be better to see this touch oversold levels before buyers step in.

First half of trading is likely to hold the answers. Selling is more likely to start the day, but selling which sticks into the afternoon will leave markets vulnerable to bearish 'evening' stars and on to September lows.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I do a weekly broadcast on Friday's at 13:30 GMT for Tradercast, covering indices, FX and gold, silver and oil - all are welcome! You can read what others are saying about Zignals on Investimonials.com.