Large Caps Posted Strong Gain But Buyer Beware

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. 


The Nasdaq had been the lead index in recent weeks, but it took a step back today compared to its peers. As a result, there was no supporting accumulation to go with today's gain. In addition, the doji finish marked a balance between buyers and sellers - which after an extended a rally - is bearish. 


The Russell 2000 hasn't quite kicked on in the same way as other indices as appetite for Small Cap stocks dropped (light volume), but it has maintained a support level and despite relative performance weakness it offers the best risk:reward of the lead indices for buyers. 


With today's gains in Large Caps, the S&P now sits at 15.8% above its 200-day MA, which mean it's now at the 5% zone of historic price action, joining the Nasdaq in a similar situation. Historically, when an index has outperformed 95% of historic action it is ready for a new downleg. If not this month or next, then by November (election result?), we could be looking at a next major move down. Buyer beware.  



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

S&P "Bull Trap"?

Image
I thought there was sufficient evidence to argue against a "bull trap" in the S&P, but it would appear the market wasn't interested in such thoughts and sellers were quick to reverse the initial push above 4,200.  Adding to the pain were new 'sell' triggers in MACD and On-Balance-Volume, although the former occurred above the 'bullish' zero line, making it a weak signal. Selling volume ranked as distribution as selling momentum picked up speed.  The index is also underperforming relative to the Russell 2000. 
Read more

"Black Candlesticks" are a concern for the S&P and Nasdaq

Image
A bright start for bulls on the back of positive $NVDA earnings wasn't enough to generate a day of meaningful gains.  However, it did help stall the losses of the last couple of days. The Nasdaq was the biggest beneficiary of today's action, but not enough to see an end-of-day finish that cleared last week's swing high, nor delivery of a large white candlestick, despite the morning breakout gap.  Technicals are net bullish and relative performance against the S&P has become consistently stronger since the start of May.  While today's candlestick I would view as typically 'bearish', today's volume ranked as confirmed accumulation (bullish). Overall, I would be looking for higher prices from here. 
Read more

Round 2 for the bearish "black" candlestick in S&P and Nasdaq

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Archive

Show more