Markets Continue To Map Swing Lows

A solid day for indices as markets continued the good work from Friday. Even the Dow Jones was able to firm up a potential 'bullish morning star' sequence.  There is still work to do but this looks better for bulls with anyone considering a short trade lacking a natural point of attack (yet).

The Semiconductor Index is just a few points shy of a breakout and continues to be the index likely to lead out the next rally (or fake it).

The Russell 2000 will be looking to challenge 1,564 tomorrow. A break of this swing high will attract sideline money to trade into its next challenge of the all-time high of 1,615. There was an uptick in relative performance after months of weakness; if this metric crosses its moving average it will act as a confirmation trigger for a possible leadership switch back in favour of Small Caps.

While Small Caps are making inroads against the Nasdaq, the latter index is out-performing the S&P with a sequence of new highs. Existing longs have no reason to sell yet (trailing stops on a loss of 7,085).

Finally, the S&P is coming into testing converging 20-day and 50-day MAs resistance as it works to challenging (and negating) the 'bull trap'.  If there is an index which is going to struggle tomorrow the S&P will be it.

You've now read my opinion, next read Douglas' blog.

I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for "fallond".

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Dr. Declan Fallon is a blogger who trades for fun on eToro and can be copied for free.
. I invest in my pension fund as a buy-and-hold.

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