Small Caps Recover Strongly as Nasdaq Breakout Stabilizes
Buyers made a strong defense of the Russell 2000 as yesterday's losses were reversed - and then some. However, there is still some 2-3 days worth of buying required before it can be said to be challenging new highs. Weak shorts will have covered today but more staunch shorts will be feeling nervous; a move above 1,710 is a cover of any short.
The real beneficiary of today's buying was the Nasdaq. Having successfully held on to breakout support today saw the index put some distance away from support - any move back to such support should attract fresh buyers. The index also continues to outperform the S&P.
The Nasdaq 100 is also building support at the 20-day MA and a push above 7,500 would negate the July 'bull trap' and mark new all-time highs.
Large Caps are contained by their rising channels and today's buying didn't do much to change this. The point of note was the bounce off the 20-day MA for the S&P.
The likelihood is that the majority of new trades over the last couple of days were short trades. So, now it's a question how these short-trade holders will react if prices continue to rise. Certainly, any push to new 52-week highs should force the last of the shorts out. Long traders in the Nasdaq or S&P have some reason for optimism as traders will likely transition back to long positions if prices hang on here.
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".
If you are new to spread betting, here is a guide on position size based on eToro's system.
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Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Dr. Declan Fallon is a blogger who trades for education on eToro and can be copied for free. Investments are held in a pension fund as buy-and-hold.
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The real beneficiary of today's buying was the Nasdaq. Having successfully held on to breakout support today saw the index put some distance away from support - any move back to such support should attract fresh buyers. The index also continues to outperform the S&P.
The Nasdaq 100 is also building support at the 20-day MA and a push above 7,500 would negate the July 'bull trap' and mark new all-time highs.
Large Caps are contained by their rising channels and today's buying didn't do much to change this. The point of note was the bounce off the 20-day MA for the S&P.
The likelihood is that the majority of new trades over the last couple of days were short trades. So, now it's a question how these short-trade holders will react if prices continue to rise. Certainly, any push to new 52-week highs should force the last of the shorts out. Long traders in the Nasdaq or S&P have some reason for optimism as traders will likely transition back to long positions if prices hang on here.
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".
If you are new to spread betting, here is a guide on position size based on eToro's system.
---
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Dr. Declan Fallon is a blogger who trades for education on eToro and can be copied for free. Investments are held in a pension fund as buy-and-hold.
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