Tuesday, November 10, 2020

S&P and Nasdaq can't break September swing high

It was another struggle for the S&P and Nasdaq as they tried to get past the swing high of September. Only the Russell 2000 is showing signs of relative and price strength, which is good, but broader participation is required if those gains are to stick. 

The Nasdaq has fallen inside the prior trading range established from September. While triple tops are rare we are looking at the possibility of one here. Today's bullish 'hammer' may offer a launch point to challenge the bearish engulfing pattern high - which would be enough to restate a breakout.  Not surprisingly, there was a large drop in relative performance to the Russell 2000. 


The S&P's sizable inverse 'hammer' yesterday was dominant, so today's low key selling was a bit of a reprieve. However, the index was unable to close above the September peak - which is the one I'm watching - so it's still a wait-and-see approach to the market.


The Russell 2000 is performing the strongest of the lead indices, and the channel breakout is also holding the breakout gap from Monday. While the 'black' candlestick is typically bearish as long as the breakout gap holds then bulls have the edge. Relative performance remains strong as other technicals stay net bullish.


We again are left leaning on the Russell 2000 to do the hard work. We haven't any upcoming news cues with the election decided, despite Trumps' lack of concession and positive Covid19 vaccine news.  The news could be worse, but this wouldn't be positive for the market. There needs to be a strong push beyond September highs to negate the bearishness of that peak, but we haven't seen it yet. It could yet be the start of a bear market. 

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

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