Showing posts from October, 2016

Small Caps Head South, Large Caps Drift Lower

After failing to build a swing low at September's lows, the Russell 2000 went the other The breakdown has moved out of the consolidation which has been in play since July, opening up for a retest of the June swing low at 1,086. Technicals are heavily oversold, so a reaction bounce, potentially from the open, would not be surprising.

Tech Hold Breakout,.but S&P Wedge Bound

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today. There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

More of the Same: Small Bearish Wedges

Friday had bears rubbing their hands in glee as it finally looked like momentum was shifting their way, but bulls again stepped in to take markets back to their open price, and in some cases, higher. Volume did climb to count as distribution, but with the small price changes for these indices The S&P remains tightly bound to the rising wedge. Swing traders have the best chance to profit; market coiling action often leads to a directional trend - either a continuation down or a counter break higher, stop on the flip side. Technicals suggest a move lower.

Mini-Bearish Wedges in Lead Markets

The last few days have seen little movement in key markets. The one potential development to look to resolve tomorrow or Monday are rising wedges in certain markets. The advantage bulls have is that if markets can push above wedge highs (which are close), shorts will be squeezed in a buying scramble. The S&P has a created a small, rising wedge off a larger rising wedge from September. The 20-day and 50-day MAs lend additional overhead resistance as does higher volume distribution for the index today (although the trading range for the day was very narrow).

Neutral Day for Indices

Markets were unable to build on premarket gains, but did manage to finish the day where they started. The S&P closed with a narrow range doji, a doji which finished below Friday's bearish black candlestick. The pattern of the last five days is playing more in bears favour, but with support around 2,115 holding there is still a chance a broad swing low is in play; confirmation comes on a move above 2,160. Trading volume sided with bulls on a confirmed accumulation day.

Late Selling Leaves Markets at a Crossroads.

The follow through from Thursday's buying burned out after the first hour of Friday's trading and Friday closed back at Thursday's close. Where Thursday's action had set up for upside follow through, Friday's 'inverse hammer' is offering the reverse.  The question is how strong the respective buying and selling which created the spikes from Thursday and Friday are? Monday is likely to start with a test of Thursday's buying. What happens after the first half hour of trading will set the tone for the rest of the day. The S&P is trading below 20-day and 50-day MAs. Thursday's selling was greater than Friday's buying which is another tick in the bear column. Technicals are all negative. The only positive was the relative out performance of the index to the Russell 2000.

Sellers Hit Out

Today had the look of a decisive break down, but the last such breakdown from September's Brexit vote had a similar guise, but it failed to follow through. Volume climbed to register as another distribution day, the second (third for the S&P) such day since the last accumulation day. Tomorrow could be the decider, but it needs to break down right from the open - otherwise the agony will continue. The S&P is back showing net bearish technicals. However, the index continues to outperform the Russell 2000.

Action Remains Tight

For a while on Friday it looked like Bears had the break through, but Bulls came back at the end to push indices back inside scrappy consolidations. If there is a concern for bulls it's that the S&P now finds itself bumping against the 50-day MA. Volume also climbed to register as distribution for the index. The one plus for bulls is that the index has started to out perform against Small Caps.

Bulls Attempted a Rally

What was looking very good into the last couple of hours just ended up been good.  The weakness from yesterday was pushed aside and there is a buying opportunity for aggressive traders with a loss on yesterday's lows. The bullish lead was the Russell 2000. It was in the process of breaking from the 'bull flag', but ended the day back inside it. Technicals still hold to a MACD 'sell', with a weakening +DI/-DI and stochastic. However, price action is the best of the indices.

Bears Take The Iniative

There wasn't a whole lot to today's action. The coiling action unwound with a relatively unconvincing push down. There was no significant break of support or move out of prior consolidations for major indices. Volume climbed in confirmed distribution. The S&P is resting on rising support having edged an intraday break of such support. Technicals are as they were yesterday with a 'buy' in Stochastics and MACD and a 'sell' in On-Balance-Volume and Directional Indicator.

Inside Day Set Up

Monday's candlestick finish for many of the lead indices was an inside day of an inside day. How this coiling action unravels remains to be seen, but trading a break of Monday's high/lows with a stop on the flip side would give swing traders something to work with. The S&P is playing into a rising wedge with technicals net bearish, although intermediate term stochastics and the MACD are on 'buy' signals. This looks like it will be break down, but those who follow my ChartDNA posts will see an improving intermediate term picture (for bulls). I should add, I'm holding a Dow Jones short position, so my bias is bearish - but I have doubts...

Window Dressing or Ready To Run?

After my 2 week work break I've come back to a mixed message market. The question is which market is in charge? The clear leader over this period has been the Semiconductor Index. It pushed to new highs in a strong relative push. This restores the net bullish technical picture for this index dating back to July. The question is how much strength in this index can pass through to the Nasdaq and Nasdaq 100. The fresh MACD trigger 'buy' is a new pullback signal with a stop below the recent swing low.


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