Wednesday, December 04, 2019

Reactionary bounce for indices

After yesterday's gap down there was a bit of a reactionary bounce to the selling.  Indices have confirmed breaks from rising channels, so now it's a question of defining how long indices will move sideways for; there is still plenty of support to work with should indices fall further.

The S&P has major support at 3,025 which is close to the 50-day MA. Volume fell, in line with consolidation action. A safe Hold for now.

It was the same story for the Nasdaq; a channel breakdown but an index which is well above nearest support. Hold territory for now.

The Russell 2000 made its bounce, enough to see it return inside the channel. Of the lead indices it's the only one to recover channel support - but it also looks lie the one most vulnerable to a short attack. We will see what tomorrow brings.

The Dow Jones was the first index to test support marked by July and September swing highs. How this index performs from this test will help determine what can be expected from other indices.

For the next few days, the Dow Jones Industrial Average and the Russell 2000 are the indices to watch. Should bulls control the market then I would expect a swift move to new highs after what amounted to a 'bear' trap in this index. However, current US-China trade relations suggests a more neutral outlook -  but if bears were to squeeze from here then I would look to the Dow Jones Industrial average to lose out first.

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.