Sunday, February 10, 2019

Small gains help keep indices near 200-day MAs

Market reversals off 200-day MAs were stalled by Friday's low key buying. The Dow Jones Industrial was the one index which was above its 200-day MA heading into Friday and ended the week with a bullish hammer right on its 200-day MA.

The Dow Jones Index had already cleared declining resistance at the end of January prior to breaking through its 200-day MA. To help with 200-day MA support there is the fast approaching 20-day MA. Collectively, there is a potential buying opportunity for a push to 26,300 (the last October swing high), stops on a loss of Friday's low.


Other indices still have work to get too, before they can move beyond their 200-day MAs. The S&P should be the most favored given action in the Dow Jones Index. Relative performance (vs the Russell 2000) is slowly improving, the MACD has breached resistance and On-Balance-Volume enjoys a strong accumulation trend. While not an ideal long play, stops can go on a loss of the 20-day MA.


The Nasdaq cleared declining resistance in a breakout at the start of February but hasn't yet risen to fully challenge its 200-day MA. Like the S&P it's enjoying excellent technical strength and strong accumulation.


The Russell 2000 is a small step behind the Nasdaq as it has yet to breach declining resistance but its nestled right against it. The Short position is still 'active' but the mini-tweezer bottom generated by Friday's close suggest higher prices lay ahead.


The one index to flash a bearish reversal was the Semiconductor Index; Friday's close registered as a possible 'bull trap' but there was enough gain for this to be quickly negated if there is a higher close on Monday.


For tomorrow, Shorts can look to the Semiconductor Index and possibly the Russell 2000. Longs can focus on the Dow Jones Index.


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


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Investments are held in a pension fund on a buy-and-hold strategy.
 
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