Monday, March 08, 2021

Indices find support on bullish 'hammers'

Bulls made decent intraday recoveries to close near highs on Friday - registering bullish 'hammer' candlesticks across the indices. These will offer a good launch point for next week.  

The Nasdaq closed on higher volume accumulation as it finished with a bullish hammer off the early January swing low. Technicals are all net bearish, making the likelihood for a move into Friday's spike low relatively high - although I would be look for a more bullish move on Monday.

The S&P staged a recovery to close above its converged 20-day and 50-day MA, but not before there was a close below the bullish mid-lime in stochastics. Typically, this would mark a shift from bullish to bearish, but relative performance ticked up against the Russell 2000, which offers an opportunity for buyers from Friday to mount a challenge of the February swing high. Should Monday start brightly, then the chance for a successful test of the mid-line stochastics increases (significantly reducing the prospect for a bear market in this index). 

The Russell 2000 also closed with a bullish hammer, although it managed to find support at its 50-day MA, albeit on lighter buying volume than Thursday's selling. 

So, for next week we will want to see how much support there is from Friday's bullish 'hammers'.  Aside from the Russell 2000, these have  occurred away from natural support levels, but this doesn't mean they are not important.  A close into the spike low would suggest than demand is not as great as we would like to see. 

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

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