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Showing posts from November, 2016

Small Caps Maintain Selling - Tech Joins In.

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Sellers kept pressure on the Russell 2000 with the Nasdaq and Large Caps also partaking in the profit taking merrymaking. Large Caps had begun with a boost, the Dow in particular had started well, but was pegged back to finish with an inverse 'gravestone' doji. With sellers picking up the pace in the Nasdaq and Russell 2000 there is a good chance the 'gravestone' doji will hold to its name and deliver trouble tomorrow.

Bulls Make Comeback

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It didn't last long, but sellers quickly ran out of steam. Monday had the look of a profit taking, but buyers were quick to make a reappearance. Will markets make it back to Fib retracements? They look a long way way away.

Russell 2000 Experiences Profit Taking

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Friday's partial trading delivered a final boost before holiday hangover selling kicked in. There is plenty of room for profit taking in the Russell 2000; look to Fib retracements for pullback opportunities. One thing I had missed was the profit take warning in this index; the Russell 2000 has tagged the 14.3% and 12.3% push above its 200-day MA which is in the 10% zone of historic price action dating back to 1987 (see table at the end of this post).

Indices head into Thanksgiving on a High

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Well, the Russell 2000 just hasn't stopped since the election results. An incredible run. There isn't a whole much to be said on the day, although it was somewhat surprising to see higher volume accumulation. I'll leave you with the Russell 2000 chart.

Dow & Nasdaq Breakout

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I covered my short position on today's little pop higher in the Dow Industrials, which along with the Nasdaq, delivered new breakouts. The S&P added nearly a percentage point as Large Caps looked to make back some of the ground lost to Tech and Small Cap Indices. On-Balance-Volume will likely be bullish once volume is posted to the chart - confirming a return to a net bullish technical state.

Low Key Friday

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There wasn't much to say about Friday's action. Indices which had pushed to highs continued to benefit from those moves, while indices stuck beneath resistance remained below resistance. The S&P was a case in point for the latter. Small losses of from 2,190 kept the index pegged to August tight trading action. Volume was light, affirming the action of consolidation. Technicals - aside from On-Balance-Volume - remain positive, which suggest a breakout is favoured for this week.

Semiconductors Do The Hard Work

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While Trump's election provided the catalyst to stimulate frenzied buying, it has been Semiconductors which have done most of the hard work. Today's gain provided a cushion to the consolidation built up since September. Since the election result the buying in the markets has looked panicked, but action in this index has look very controlled.  This is good news for Semiconductor stocks, but it should be good news for the Nasdaq and Nasdaq 100. Of the Nasdaq, it's approaching resistance from September. Action in the Semiconductor Index, along with net bullish technicals, suggests further gains could be on the table.

S&P and Semiconductors Breakout

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Market divergences continued to play out. This time, the S&P and Semiconductors broke clear in fresh breakouts, but the likes of the Nasdaq and Nasdaq 100 haven't yet followed Semiconductors higher. The S&P cleared the last swing high, but still has August highs to breach. Technicals, outside of On-Balance-Volume, are bullish. The Nasdaq finished higher but hasn't yet marked new all-time highs. As with the S&P, technicals - other than On-Balance-Volume - are bullish.

Significant Divergences in Play

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It has been a while since such short term divergences emerged in the market: big gains for Small Caps, struggles for Tech, with Large Caps stuck in the middle. The Russell 2000 chalked up a sixth day of gains as it neatly took out the 'bull trap' and prior highs.  The relative performance is off the chart of its historic relationship to other markets. It needs some comeback, but even when that happens it will remain well ahead of other markets.  Technicals are net bullish.

Gains for Small Caps and Dow, Other Indices Struggle

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It was a mixed day for markets. Small Caps continued their rich vein of form with a near 2.5% gain, coming after four other days of gains. Some pullback is inevitable, but this has a good chance of becoming a buying opportunity. Relative performance has rocketed following steady declines since September.

Small Caps Maintain Gains But Tech Struggles

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There was a big divergence in markets as the Nasdaq succumbed to fears of a Trump presidency as Blue Chips held fast. Volume climbed to register as distribution for Tech stocks. Unfortunately, this all occurred after my election night short position was stopped out, but new shorts may enjoy better fortune. The Nasdaq turned a MACD and +DI/-DI 'buy' trigger. Relative performance accelerated lower as other indices enjoyed more positive days.

Markets Breakout

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In a day of turmoil the unlikely struck in many guises; from the Trump election, to the election pre-maket sell off, to the huge accumulation rally delivering new breakouts - it was 6-months of activity in a single day! Kicking off things is the S&P breakout. Today's volume was massive. With today's gain it only has to negotiate the tight range from July/August before new all-tie highs are in play. Today's gain brought fresh 'buys' to Stochastics, +DI/-DI, and MACD.

Resistance Boundaries Hold

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There was some follow through to yesterday's buying, but resistance wasn't breached in newly defined channels and wedges. Will there be a 'sell the news' event tomorrow once the election is announced? The S&P tagged its 50-day MA before it came back to rest under declining channel. Volume dropped for a second day, but there was a MACD trigger 'buy'.

Clinton Wins Election.

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Or so the market thinks. Solid gains all around would suggest marker participants have banked a Clinton win and are looking to pick up value. The question is whether narrow trading from July or August is really a barrier or just a symptom of a summer lull. The S&P is back at the rising wedge, and resistance at 2,130. Also note the development of a new downward channel. Watch for a stall out on a tag of channel resistance.

Stage Set for a Rally

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Friday delivered the tentative tests of the 200-day MA that markets had teased since breaking down from rising wedges. This has left markets in a good place for bulls to exploit on Monday. The S&P finished at the low of the day, but these 'inverse hammers' are typically viewed as bullish since while the S&P was unable to hang on to intraday gains by the close of business, there was no significant loss off the open price (i.e. no follow through down). Assuming there is no pre-gap lower on Monday (and even if there is, a buy just before the open might prove tempting), bulls could find themselves in a good position to trade into a probable Clinton victory.

Indices Approaching 200-day MA

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Yesterday's selling continued with Small Caps again taking the bulk of the heat. The Russell 2000 is fast approaching its 200-day MA which should be a buying opportunity.  An overshoot of this moving average in June lead to a 3-month rally, can lightning strike again? Technicals are already oversold, so there is little guidance on offer here.

Bears take a chunk out of the Market

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Not since the start of September have Bears been able to make an impression. For many indices, volume climbed to register a distribution day, adding to market troubles. There is no long term damage to markets as they remain within easy reach of all-time highs. Also, markets have reached oversold levels on intermediate and near term time frames, suggesting a bounce is likely soon. The S&P was able to claw back some of the losses from the intraday low, but it wasn't enough to avert a net bearish finish for the day. Technicals remain firmly negative.  The best thing about the index is the continued relative out-performance to its peers; when buyers reappear they are likely to buy into defensive Large Caps ahead of other indices. Watch for early strength - a two bar reversal would be an ideal play for Wednesday.

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