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Showing posts from September, 2020

Markets attempt to rally but fall short by the close

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It was looking good for the indices in early m the day, but by the close indices weren't able to hold on to their gains. However, all indices finished in positive territory and any (small) upside tomorrow would likely be sufficient to maintain momentum. The Nasdaq closed today with a 'buy' trigger in the MACD and ADX, along with a 'buy' trigger in On-Balance-Volume.The Nasdaq is outperforming the Russell 2000 and while it has enjoyed just over a week's worth of gains it has so far resisted the initial move to the measured target. 

Bounce stalls despite morning gaps

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Friday's rally offered a promising open with a gap higher, but there was no follow through on these gains.  In the case of the Nasdaq, there was a close above the 50-day which also picked up the 20-day MA but if the gap is to register as a true 'breakout gap' it cannot close. There was  a 'buy' trigger in OBV to go with today's gain. The index is still outperforming Small Caps as it looks to build on its leadership role as the primary home for funds. 

S&P Bounces At Measured Move Target

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An easy headline which has played out as true, although the same bounce occurred in the Nasdaq well before the measured move target is reached. In the case of the S&P, the measured move target is above the 200-day MA - a typical support level and a more likely area for a bounce - so it remains to be seen if this bounce will hold but it does provide a level to set protective stops (for existing positions in the S&P and member stocks). Note, technicals are all net negative and aren't really in support of a bounce, with the exception of short term and intermediate stochastics which have converged at an oversold state. 

Selling Accelerates; Measured Move Targets Still In Play

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Sellers again stamped their authority on markets with significant pushes lower which completely erased the weak buying of Tuesday. Markets remain on course to reach their measured move targets.  The index closest to doing so is the S&P.  No surprise to see technicals for the S&P net negative although the index continues to outperform speculative Small Cap stocks. Volume climbed to register distribution, an additional confirmation for today's selling. Once the measured move target is reached - likely tomorrow - next up will be the 200-day MA.

Selling Continues Across Indices

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Indices continued to decline with measured move targets for the S&P and Nasdaq still in play. However, the real damage was done in the Russell 2000. The index made a clean break below its 50-day MA on a gap down with new 'sell' triggers in Stochastics, ADX and relative performance. Volume climbed to register as distribution.  The index which had been defending the breakout is now having to contend with a new level of overhead supply.

Measured Moves Down In Play for S&P and Nasdaq

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Friday's selling sees a break in the 50-day MA for the S&P, following the lead of the Nasdaq from last week. Selling volume climbed in confirmed distribution across the indices. The measured move targets for both these indices remain in play with each swing low likely to breached Monday. Not surprisingly, technicals for the S&P and Nasdaq are both net bearish.

S&P and Nasdaq Move Towards ABC Correction

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Indices gapped lower in what's evolving into an ABC style correction; in essence, a zig-zag move lower with a projected target of the measured move of the initial decline. For the S&P, today's selling also registered as distirbution. The Nasdaq has a measured move target of 10,000. Technicals are mostly negative with On-Balance-Volume clinging on to its 'buy' trigger. Today's selling also undercut the 50-day MA with a gap lower. Buyers are unlikely to step in now, so until the index reaches a level attractive to buyers (hence the likelihood of an ABC correction) I will be looking for lower prices.

Early Gains Fail To Follow Through

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A bright start with opening gap gains were unable to follow through.  The Nasdaq gain came off its 50-day MA with a higher volume (accumulation) bounce. The gains were enough to see a 'buy' trigger in On-Balance-Volume but other technicals remain negative. However, as long as he 50-day MA holds this should be viewed as a pullback in a bullish advance.

Indices Close Lower With Swing Lows Under Pressure

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The Nasdaq closed below its 50-day MA as the early week swing low finds itself vulnerable to an undercut and loss of support. Expectation would be for a measured move down, which given the 1,000+ point move from the 12,074 high to the swing low, would set a current target around 10,250. Technicals are net bearish with the index underperforming relative to the Russell 2000.

Bounce Struggles Following Earlier Profit Taking; 50-day MAs Hold For Now.

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We had the initial phase of profit taking which took indices down to key moving averages. Yesterday saw the first attempt by buyers to recover the losses, but today's action has turned things much more bearish.  Bulls seem to be a far fewer in number than Bears which only accelerated the selling.  The Nasdaq is again back at its 50-day MA on higher volume distribution selling. Today's action has shifted the action net bearish in momentum, but not oversold. Only On-Balance-Volume is holding on to its prior April bullish trigger. Having only tested the 50-day MA for the first time since April just a couple of days ago, it's looking less likely it will be able to hold this moving average over the coming days. The 200-day MA is far below, so we could be looking at an ugly September until we get to this key long term moving average.

Third Day of Selling in a Row

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It was another day for sellers to pressure weak-hand longs into dumping their positions. Despite the sizable losses, most of the indices have yet to reach an oversold condition. However, there is a shift in relative performance between the indices. Losing out is the Nasdaq, it started the day at its 20-day MA but then gapped down to its 50-day MA. If the latter fails to hold then it's a long way to its 200-day MA. Stochastics are just about net bullish but it's looking likely this level won't hold. There are also 'sell' triggers in the MACD and -DI/+DI to consider. 

Sellers Step In As Moving Averages Hold

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After days of small gains it only took two days to undo the buying for the majority of August before longs stepped in to recover things by Friday's close. The savior for indices were key moving averages - the 50-day MAs in particular - as traders complacent after easy gains received a bit of a jolt. This isn't a crash, nor necessarily the start of one, but we need to see what happens when indices become oversold and whether they can attract sufficient buyers to take indices out of this condition; if they can't, then the crash sirens will have more credence.  The Nasdaq saw 'sell' triggers in the MACD and -DI/+DI, but stochastics require a few more days of weakness before they can be considered bearish, let alone, oversold. However, the 50-day MA offered a picture perfect support area for Friday's low.

Large Caps Posted Strong Gain But Buyer Beware

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After weeks of small gains it was Large Caps in the form of the S&P and Dow Jones Industrials which both posted gains. Large Caps posted gains on higher volume accumulation with strong relative performance against Small Caps. 

Sellers Appear With Volume in S&P But No Conviction

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It was looking like an day for sellers to take control but while it was a down day with heavy volume disstribution, there wasn't any significant point loss to go with the selling. Losses in the S&P occurred on significant volume but without any major change in supporting technicals or price. With bulls looking for a crash on any sign of weakness, it`s going to be hard to see a crash occurring as markets continue to enjoy gains on the back of overbought conditions. Crashes do not occur when markets are overbought but when they are oversold, and markets are still a long way from this. 

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