Bounce Continues With Volume

Buyers worked the bullish harami as a swing low with a second day of buying, this time on higher volume accumulation. Biggest winner of the lead indices was the Russell 2000, but all indices benefited.

The gains in the Nasdaq counted as a breakout yesterday but volume was light. Today's gain registered as a bearish black candlestick, with the index closing below its open price. Despite the opening loss, it didn't reverse the breakout. If prices can stay above 9,400 it would complete a return to net bullish technicals with a MACD trigger 'buy'.


The S&P enjoyed higher buying volume accumulation, building on yesterday's gain. The rally off the 50-day MA counts as a 'bear trap', which if it plays to form typical of this pattern should see a rally to channel resistance.


The Russell 2000 gained 1.5% but it had fallen out of its channel and has a long way to make it back. Relative performance is still falling off a cliff but the buying in the $IWM did enough to deliver a new 'buy' trigger in On-Balance-Volume.


On a final note, the Semiconductor Index added over 2% as it saw a return to the middle of its rising channel and finished with a close above its 20-day MA.


Tomorrow will be about holding on to the gains of the last two days. I still think this bounce has come a little early but with the Russell 2000 breaking higher, any chance of an A-B-C, zig-zag style correction is looking more unlikely with each passing day. Any big drop tomorrow will only open up for another run at the bullish harami swing low; indeed, a short attack in the opening hour of trading could set up an intermediate term short play, lasting a few days.



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

Share on StockTwits

---
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.

Follow Me on Twitter


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

Popular posts from this blog

Upcoming "Death Cross" for Russell 2000 ($IWM)

Image
There was some modest buying today from the open, but volume was light and markets are below trading range support established during the latter part of 2024. It's hard to see where the buyers are going to come from given the chaos of Trump. I should add, I listened to Josh Brown's The Compound podcast and he showed an interesting chart of market returns in April-May in the year following a strong return in markets; in essence, selling to pay capital gains tax. Given the precarious nature of markets, and the possibility for this seasonal factor to play out, it's likely we have a couple more months of downward action before value buyers return. If we look at individual markets, the Russell 2000 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
Read more

Friday's gap downs bring indices close to support. Semiconductor Index at 200-day MA.

Image
Friday's big gaps lower have the potential to become breakdown gaps, but for now, the near term oversell has for a possible move into the gap price vacuum. The index most likely to achieve this in the coming days is the Russell 2000 ($IWM). The Russell 2000 ($IWM) finished with a neutral doji, just above its 50-day MA and in a thick band of support between $207.50 and $210 marked by the summer swing highs. Technicals have followed price action with new 'sell' triggers in On-Balance-Volume and ADX, but intermediate term stochastics haven't reached the mid-line that is typical support in bull markets. Aggressive bulls can look for a move to test the underside of the 20-day MA. The S&P was unable to hold its 50-day MA on Friday's open, and instead found itself toying with the May swing high. More significant support is likely to be found around 5,265, so if there is an undercut of Friday's low then this will be the next port of call. More concer...
Read more

"Dead Cat" Bounce or Something Better?

Image
It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.
Read more

Archive

Show more