Wednesday, June 05, 2019

Breakouts for Russell 2000, Semiconductors and Dow Industrials

It was a bit of a mixed bag, although the basis for a probable swing low for markets is in place.

Best of the action was in the Semiconductor Index where there was a clear break from the downward channel, which also coincided with a return above the 200-day MA. The consolidation below - and move above - the 200-day MA has the makings of a 'bear trap'. Next challenge is getting past the 20-day MA and if it can do this on the back of a MACD trigger 'buy' it will set things nicely for a challenge of the 50-day MA, then a larger challenge of the 52-week high at 1,604.


The Dow Industrials cleared the downward channel on a modest breakout day after yesterday did most of the work. Volume was light while the MACD is still a way from triggering a new 'buy' trigger. However, there was an On-Balance-Volume 'buy'. Relative performance is also strong.


Finally, the Russell 2000 may have done enough to confirm a 'bear trap' with its return above 1,500. This also registered as a channel breakout. Technicals are still bearish but with a 'bear trap' in place a move back to 1,615 looks favoured.


Where things get a little more complicated is in the Nasdaq and S&P. Both of these indices find themselves at channel resistance, lacking the extra punch which delivered the breakouts in the Russell 2000 and Dow Industrials. Shorts may be tempted, particularly if there is no upside after the first 30 minutes of trading.



I'm expecting bulls to maintain control with the swing low still in its early development phase. If there is no bullish action after the first 30-minutes then look to the Nasdaq and maybe the S&P to lead things lower. The Russell 2000 may also find itself pushing back into its 'bear trap'.


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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