Sunday, March 28, 2021

Markets build a consolidation double bottom? Large Caps lead

The Russell 2000 and Nasdaq are building sideways trading ranges with the potential for a double bottom using Thursday's low and the March swing low as the basis for the next phase of the rally. It's not a deep pattern, but given the rally which led into it, it's as much of a consolidation as once can expect to see. 

In the case of the Nasdaq, Friday's gain wasn't enough to offset the MACD trigger 'sell' or the loss in relative performance to the Russell 2000 (although no 'sell' trigger).

The Russell 2000 is showing a potential Adam-and-Eve bottom, although there is still much work to do - first of which is to get past the 50-day MA. Technicals are mostly bearish, but On-Balance-Volume has managed a new 'buy' signal.


The S&P has rallied back to trendline resistance after a successful test of the 50-day MA, but it has also managed a new closing high. With the exception of the ADX, technicals are bullish, which should help Large Caps continue their rotation as a leading index.


The Dow Jones Index is doing most of the leadership running. Only the MACD is on a weak 'buy' signal, but relative performance has been strong since the middle of February - ahead of the S&P.


Going forward, Large Caps will be key to driving the gains which other indices will follow. As long as the S&P and Dow Jones are able to keep pushing all-time highs, the Nasdaq and Russell 2000 will follow. 

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

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