With the Russell 2000 caught inside a trading range, the breakdowns in the S&P and Nasdaq are caught in a bit of a no-mans land. As the Russell 2000 failed to break its support, both the S&P and Nasdaq are vulnerable; not just to additional losses, but also to a 'bear trap' and a rally through their respective consolidation triangles.
Finally, the relationship between Transports and the Dow Jones Index continued to struggle as it returned deep inside the prior 'bear trap'. This bearish relationship could pick up speed if 0.395 is lost. This indicator suggests a far more bearish outlook than any other index.
For Tuesday, watch the Russell 2000 if bullish and the Semiconductor Index if bearish. My hunch suggest bears are going to edge it but let price action be your lead.
You've now read my opinion, next read Douglas' blog.
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