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Showing posts from July, 2018

Semiconductors Index Breakout but Dow at Channel Resistance as Small Caps Breakdown

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Lots of divergences in play across the markets. Start with the positives, the Semiconductor Index edged above resistance in what looks like breakout. It lost ground Friday which suggests it may still require a redrawing of resistance if this is some form of rising channel. However, in the near term, this looks like a genuine breakout and look for a move to triangle resistance.

Markets Diverge; Small Caps Lag as Large Caps Make the Running

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After weeks of relatively tight trading markets stretched their legs today. The S&P took advantage of yesterday's gap to squeeze shorts on higher volume accumulation. Today's gain hasn't quite tagged channel resistance but did register as accumulation. Technicals are all bullish along with an acceleration in relative performance over Small Caps. Large Caps to lead into the Fall?

Bulls Take The Day's Honors

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While bulls shrugged off the latest Trump missive there was no reversal in markets to change their prior directions with one exception. The Semiconductor Index is still clinging on to 1,380 resistance but today's close posted a bullish hammer with a spike low at the 50-day MA. Expectations for tomorrow would be a rally break of the latter resistance and a push to triangle resistance.

No Change; Breakouts Hold for Large Caps and Techs - Small Caps Struggle

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Friday didn't bring a change in markets as the S&P, Nasdaq and Nasdaq 100 held their breakouts while the S&P struggled to negate its double top. The S&P lost a little ground but remains well above breakout support. The biggest loss was seen in relative performance but only because the index has suffered an extended period of relative decline and had only begun to reverse that.

Small Caps Enjoy Best of Action

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There wasn't a whole lot going on today except Small Caps were able to attract some buyers despite finishing below resistance; bulls have been taking advantage of the 20-day MA test. Today's action coincided with 'buy' signals in the MACD and +DI/-DI.

S&P Firms Breakout As Tech Keep The Pressure On

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Given overnight news and Netflix disappointment I was surprised to see markets finish as strong as they did given comments on the economy by the Fed Chairman. The S&P opened at support and 'engulfed' the prior day's trading; it's not a true bullish engulfing pattern as this is a reversal pattern and what we have is a breakout but it does contribute to a confirmation of the breakout.

Week Finishes in Tech and Large Caps Favour

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Large Caps and Tech indices enjoyed a good week with breakouts holding by Friday's close. There was no real volume on the breakouts but new highs leave markets in a position to attract sideline money. The S&P didn't do a whole lot on Friday but it remains on course to test channel resistance. Technicals are all in the green and the previous period of underperformance against the Russell 2000 looks to have shifted back in Large Caps favour.

Tech Indices Ignore Semiconductor Weakness to Breakout

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Tech Indices are not waiting on the Semiconductor Index aa both the Nasdaq and Nasdaq 100 closed at new all-time highs. The Nasdaq 100 had the best response with a clear breakout. This move accelerated the relative advance against the Russell 2000 setting things up nicely for a challenge of upper channel resistance.

Markets Stumble As June Highs Challenged

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It was by no means a disaster but there was an ominous feel to Wednesday's close. Bulls had used the momentum built by last week's gains to make a run at all-time highs but profit takers and shorts used this as an opportunity to get out/build a position. It's a typical stage I reaction to a resistance test but now it's a question if there is enough sideline interest from bulls to drive a break to new all-time highs and force today's shorts to cover. The S&P left a small 'bull trap' on low volume. Technicals are net bullish so if bulls can come back and reverse the 'bull trap' it would nicely set up a run to test newly drawn channel resistance. But for now, shorts look favoured.

Friday's Gains Deliver Breakout

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The past couple of weeks have been a period of give-and-take but Friday broke the mold by marking a second day of gains for many of the indices (four for the Russell 2000). More importantly, it took markets above resistance and into a position where they can mount a challenge of June highs.

Trading Ranges Dominant

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Tuesday delivered another shift with sellers coming back, although not to the same extent as Monday's buying. The net result was to leave trading ranges in key markets. Until there is a break we won't know where the nest move will come but it will keep people on the sidelines until there is a resolution.

Monday was to Friday as Friday was to Thursday

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In yet another turnaround for markets, today started with a large gap down which had the makings of a sizable bearish sell-off - only for bulls to start buying from the open and to continue to do so throughout the day.  Better still, today's surge undid much of the damage done Friday. For the S&P, the action over the last six days has much in common with the scrappy action around the 200-day MA in March/April. The only thing I don't like about this action is the frequency of the tests of the 200-day MA; the more frequent the tests the greater the chance for a break. A move above the 20-day MA should be enough to confirm a new swing low and deliver a challenge on resistance of the June swing high; riskreward measured on a loss of 2,690.  There was even an uptick in relative strength against the Russell 2000.

Supply Issues Emerge As Bounce Stalls

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Friday's action didn't bring about the bounce I would have liked after Thursday's picture-perfect defenses of lead moving averages or support. The S&P closed with a bearish black candlestick on a spike high above the 50-day MA. Volume climbed in accumulation as On-Balance-Volume triggered a 'buy' signal. I would see this as a bearish close and would look for downside Monday; potentially playing for a test of the 200-day MA

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