Showing posts from February, 2018

Sellers Double Down

Yesterday established a round of profit-taking after Monday's breakouts had suggested something more positive in the works. Unfortunately, another round of selling ranking as higher volume distribution left indices in a more precarious state. The Semiconductor Index had come close to tagging 1,400 but the index looks to have confirmed a bearish 'evening' star as part of a double top. A drop below 1,340 would send bulls running to the hills and open up tests of the slower rising channel and 200-day MA.

Fresh Distribution

Yesterday saw sellers return with a fresh round of higher volume selling. However, the breakout moves which saw indices clear the congestion of spike highs from last week were not violated so Tuesday's action will not as yet panicked existing longs or buyers of the February swing low to sell just yet. The only exception to this is the Russell 2000 which is struggling to achieve any kind of market leadership. Technicals for the S&P are generally bullish with the index still outperforming the Russell 2000 and the ADX just a small step away from a bullish cross which would be enough to confirm a net bullish picture on the intermediate time frame (i.e. suggesting this rally could go on for another few months).

Last Week's Weakness is No More

It was looking to be a struggle after last week's series of 'inverse hammers' had set up what looked like swing highs for indices but these have been cleared by today's gains. In the process of doing so the S&P closed above the 20-day MA with 'buy' signals in the MACD, On-Balance-Volume and Stochastics. Only relative performance is underperforming.

Markets close week near weekly highs

Markets delivered a strong end-of-week close which for many meant a close near spike highs. The strongest finish of the week was delivered by the Nasdaq 100 - it posted a new high as it builds a challenge on the January 'bull trap'. Volume climbed to register an accumulation day. If bulls are in control then the Nasdaq 100 should see some follow through higher; note the strong relative performance against the Russell 2000.

'Bull Trap' in Dow Jones Industrial Average

Starting to see evidence that the February bounce in markets is fading. The Dow Jones Industrial Average finished with a 'bull trap' as it ducked below breakout support despite finishing above yesterday's close. Volume dropped as relative performance against tech indices took a marked step lower. Troubling times for the 'flight-to-safety' route.

Sellers Come In But Semiconductors Gain

Markets were set up for sellers with most indices experiencing broad selling. However, the one index which looked set up best for shorts - the Semiconductor Index - actually managed to gain.  Anyone taking up Friday's short in the latter Index will have been stopped out but another shorting opportunity may have presented itself. Technicals haven't returned to becoming net bullish but only the ADX remains to shift.

Rallies Slow As Semiconductors Tag Resistance

Friday saw the indices close near the lows of the day as Semiconductors tagged resistance and its 20-day MA. Supporting technicals offered a mix of bullish and bearish markets but shorts have their opportunity with a stop above 1,334. The S&P edged a close above the bullish mid-line in stochastics along with a 'buy' in On-Balance-Volume. However, the index also experienced a relative loss against Small Caps as it struggles to attract new buyers. The Russell 2000 pushed across the bullish mid-line and is close to a new MACD 'buy' trigger. While the Russell 2000 is outperforming against the S&P it's underperforming against the Nasdaq. However, a push above the 20-day MA may be enough for it to regain overall leadership. The Nasdaq may be the relative market leader but Tech indices closed lower where Large and Small Caps finished higher. A loss tomorrow will kick off the potential development of a new downward channel; marking a continued expansi

Rallies Continue But Still Considered Relief Bounces

The bounces playing out for markets still have the look of relief bounces - at least until technicals confirm net bullishness. However,  long opportunities present themselves. For the S&P, price action looks to be confirming a double bottom which should be enough to see a challenge of 2,873. Today's volume was lighter which suggests the rally from here will be a struggle but 'climbing the wall of worry' will suit bulls at this point.

Defense of 200-day MAs Continue

Markets continued their advance after successfully bouncing off their 200-day MAs. While indices play defense and edge small gains they are in a position to gradually attract fresh buyers.

Volatility Breakout As Indices Successfully Test 200-day MAs

The story of volatility has been overplayed the past week but this has as much to do about the general lack of volatility since the market lows of 2009. February has the potential - although there is plenty of time left to change this - of marking a shift towards a period of high volatility comparable to that of 2008. It doesn't necessarily mean markets will crash as they did in 2009 but it could be a rocky ride for those over trading their accounts.

Decision Made - Rush to Profit Taking

Having spent the weekend away I missed the initial breakdown but today was a clear rebuttal of the 2018 rally. The past two days have undone all of the gains of this year - undercutting slower channel support for many of the indices. The S&P climbed to register as distribution with a net bearish turn in technicals. Next downward target is the 200-day MA around 2,530.

Decision Time for Russell 2000

So far, the sell off has been relatively orderly with a mix of accumulation and distribution. Barring initial breakdowns from acute channels there hasn't been any acceleration in the downward moves. The first index to offer itself as a bounce opportunity is the Russell 2000.  Today's slightly higher close left the index bang on wedge support anchored by the November and January 'bear traps'. Technicals are weak but aside from the relative performance there hasn't yet been a net bearish shift so there is still a chance buyers could step in and attract fresh buying.


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