Friday Fails To Recover Thursday's Losses
Friday's end-of-week action didn't generate a big splash, but it did give an inkling as to what might happen for the coming week when the sequence of loss, gain, loss was met with a failure of markets to hold on to Friday's strong open.
The S&P maintains the 'bull trap' with Friday's low volume amplifying the weakness of Friday. Other technicals are holding on, but for how long.
The Nasdaq finished with a bearish black candlestick, but retained support of its 200-day MA. It's also pegged by 4,900 resistance, which was support at the end-of-2015, but has since proved it to be sticky resistance. The 20-day MA is also fast approaching; maybe this will be the kicker to get the index above 4,900? MACD holds to a 'sell' trigger.
NYSE Breadth looks to have marked a top with a rollover from a new high (of extreme bullishness). However, given the fall from extreme bullish breadth, the next swing low could prove an attractive 'buy' the dip opportunity.
Nasdaq breadth - particularly the percentage of stocks above the 50-day MA - is looking a little rich. This in the context of an index which still has room to go to make a new high; suggesting this advance will not be one to do it if new all-time highs are to happen.
The Nasdaq monthly chart is also pointing to a top with plenty of room before the percentage of stocks above the 200-day MA is oversold enough to suggest a long term bottom.
Finally, the Russell 2000 is also playing close to a possible inflection point. The rally is getting close to converged resistance which would mark a confirmation of a reversal head-and-shoulder pattern. Stochastics have remained in the bearish camp throughout the rally from 943 lows, while the MACD histogram is heavily overbought.
For the coming week, watch for a sell off to create the next swing low. The volume which accompanies the fall will give an indication as to whether the downleg will be a temporary fall, or something with more merit for shorts/bears.
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 also trade on eToro and can be copied for free.
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The S&P maintains the 'bull trap' with Friday's low volume amplifying the weakness of Friday. Other technicals are holding on, but for how long.
The Nasdaq finished with a bearish black candlestick, but retained support of its 200-day MA. It's also pegged by 4,900 resistance, which was support at the end-of-2015, but has since proved it to be sticky resistance. The 20-day MA is also fast approaching; maybe this will be the kicker to get the index above 4,900? MACD holds to a 'sell' trigger.
NYSE Breadth looks to have marked a top with a rollover from a new high (of extreme bullishness). However, given the fall from extreme bullish breadth, the next swing low could prove an attractive 'buy' the dip opportunity.
Nasdaq breadth - particularly the percentage of stocks above the 50-day MA - is looking a little rich. This in the context of an index which still has room to go to make a new high; suggesting this advance will not be one to do it if new all-time highs are to happen.
The Nasdaq monthly chart is also pointing to a top with plenty of room before the percentage of stocks above the 200-day MA is oversold enough to suggest a long term bottom.
For the coming week, watch for a sell off to create the next swing low. The volume which accompanies the fall will give an indication as to whether the downleg will be a temporary fall, or something with more merit for shorts/bears.
You've now read my opinion, next read Douglas' and Jani's.
---
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I also trade on eToro and can be copied for free.
JOIN ZIGNALS TODAY - IT'S FREE!