Sellers Begin The Squeeze

The opening gaps lower could have evolved into something worse but indices did well to stay close to their open price, even managing an intraday rally, but not enough to make new highs.

Again, the index to watch is the Russell 2000; today's inverse hammer would normally be considered a reverse candlestick, but as it didn't occur at a swing high its significance is reduced. However, we have an index which is lurking near breakout support and looking vulnerable. On the good news front, selling volume was light.

The S&P is holding to its 50-day MA as technicals remain net bullish. The index is well above its breakout point but traders should be looking at the Russell 2000 with concern, because if it fails then the Nasdaq and S&P will likely follow suit.

The Nasdaq has moved above its breakout level, the February swing low, 50-day and 200-day MAs. What's left as resistance is the February swing high, the February gap down, and then new all-time highs. In light of what's happened it's hard to see the index making new all-time highs without a vaccine, so what's left to achieve...

So, we have a Russell 2000 feeling the pressure and struggling for traction, a Nasdaq which has probably achieved as much as it can, and an S&P caught between the two indices. Certainly not a time or buyers.

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

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