Nascent Swing Low

Friday did enough to confirm Wednesday's spike low as a potential Swing Low. Markets may look to rally back into the Oct-Dec trading range, but getting beyond that may prove more of a challenge. But until then, is plenty of room to support a low volume rally.

For the S&P, there is a thick level of support from 2,000 up to 2,025. Beyond that, things quieten with the 200-day MA, then a successive level of swing highs. Technicals remain in bears favour, although there was a 'bull' cross in On-Balance-Volume.

The Nasdaq is aiming for 4,900, but its first challenge is getting back to the 20-day MA.

Nasdaq breadth has fallen deep into swing low territory - comparable to 2011 - across all four metrics. A trade worthy low should be in place; weakness could be bought

The Russell 2000, the hardest hit of the indices, could form a 'bear trap' with a higher close on Monday.  The index was the first to record a 25% loss from 2015 high to recent low. The relative performance of the index remains down, but it's getting close to a bullish cross.

As a bonus, relative performance across different markets shows how far commodities have fallen.  Historically, they look to have reached a level which could mark a bounce (1999 lows). Global stock markets remain closer to overbought conditions, despite the losses already experienced.

Another sign of a bottom is the spike high in the number of NYSE stocks making new 52-week lows. While further lows (and new spike highs) are possible, a decent trading low should be in place.

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, and Product Development Manager for I also trade on eToro and can be copied for free.


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