The S&P managed to clear its 'pennant' consolidation a couple of days ago, but today's weak close was not exactly a ringing endorsement of strength. There was at least a fresh MACD 'buy' signal in the mix.
It was a similar tale for the Nasdaq, although today's close wasn't enough to finish above its 50-day MA. It did enjoy a MACD trigger 'buy' and volume did rise, although technically it ranked as distribution because of the lower close. It also lost a little relative ground against the S&P.
The Russell 2000 had also cleared its consolidation, but its need for a show of strength is greater and while all indices finished lower, the loss in the Russell 2000 was still enough to keep relative performance down in the dumps.
From a trade perspective, action suggests traders can be buying for a move towards trading range resistance. But because we are in these trading ranges, the chances of experiencing a whipsaw event is very high and today's limp response to the various consolidation breakouts reflects this uncertainty.
You've now read my opinion, next read Douglas' blog.
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