Showing posts from August, 2017

Waiting for the Bounce - Vacation until September 3rd.

Friday offered the opportunity for more but in the end it was honors even between bulls and bears. The S&P finished the week on bearish net technicals on higher volume distribution. One positive was a potential doji (and a chance for a 'bullish morning star' on Monday) which is a chance for bulls to buy the open with a stop on a loss of 2,420. Another is the very strong relative performance - when money comes into the market it's the S&P where it's going.

Volatility on the Rise

Today's losses look big on current charts but in a historic context, they weren't too severe. However, big red bars are not to be ignored and 'market leading' Small Caps have felt the full brunt of the selling from July which is bad news for the broader market.  Today's losses in the Russell 2000 undercut the 200-day MA leaving 1,345 as next support (of which I would not be too confident of it holding).

Time to Short?

We had the profit taking sell-off and then the bounce but is now the time for shorts to come in more aggressively? After yesterday's gapped gains there was a significant slow down in the market advance. This action presents an opportunity for shorts to attack. The Semiconductor Index is one of the most attractive indices for shorts. The massive June bearish engulfing pattern remains dominant and offers guidance going forward. Tuesday's doji has the makings of a bearish harami cross.  Technicals are bearish and aligned in shorts favor.

Shorts Take Profits - Bounce Opportunities Available.

Last week brought a shock to traders reared on sub-1% daily swings as profit taking losses of 2%+ swept the board on Thursday in the face of Trump uncertainty. It's a bizarre market given uncertainty is the enemy of the market and the world is full of uncertainty yet market participants were happy to bid up Trump's election. It's not all doom and gloom. The Nasdaq made a recovery just above channel support. It might be a little early for a bounce but Friday's action should be respected. MACD, On-Balance-Volume and ADX are bearish but stochastics are at a bull market support level. If looking long side then risk is measured by a loss of 6,215.

Small Caps Accelerate Losses

The Russell 2000 has been the index under the most pressure since peaking in July and it was the index to suffer greatest from sellers. The index is trading inside the early summer trading range and typical after a false breakout is a move back to range support, currently at 1,345. The 200-day MA will be the first port of call on the way down, which as of Wednesday's close ist at 1,369.

Semiconductors Make Biggest Gain Off Support

Indices experienced varying degrees of buying Monday, most of it relatively small. Biggest winner was the Semiconductor Index as it rallied from converged channel, 20-day, and 50-day MA support. This was accompanied by bullish upticks for both ADX and Stochastics.

Nasdaq Breadth Metrics Race Lower

The Nasdaq and Nasdaq 100 were able to finish the week on support but breadth metrics took a nose dive lower. Both the Nasdaq and Nasdaq 100 only have MACD trigger 'sells' to mark weakness.

Dow Jones Industrials Ploughs a Lonely Furrow. Small Caps Feel The Strain

Markets are feeling the pinch in what was a heavy sell off in the Russell 2000. The break of the rising trendline has accelerated a rout rather than consolidated a 'bear trap'.  The index undercut the 50-day MA in a clean move which didn't suggest demand buyers were willing to step up to the plate. Next stop is the 200-day MA.


Show more