Thursday, March 04, 2021

Nasdaq losses accelerate

The potential 'bear traps' quickly stalled and sellers again returned to the fore. Selling in the Nasdaq undercut the lows of the 'bear trap' with a finish on the low of the day.  There was also a 'sell' trigger in On-Balance-Volume.  The wide intraday bar marks a change in the action since the beginning of this rally in November and today's volume marked a return to distribution,.

There was a similar sell off in the S&P, although there was no undercut of the swing low. It finished the day on the 50-day MA with well established 'sell' triggers for the MACD, On-Balance-Volume and ADX. Only stochastics are bullish, but while not overbought they are someway from the mid-line - further selling likely.  The index still has yet to outperform the Russell 2000, but there is a migration away from Small Caps to Large Cap stocks


Of the Russell 2000, it still clings to trendline support and what amounted to a relatively quiet day for the index (unlike for the S&P) with an intraday range typical of what's happened before. Despite this recent trading volumes has strongly sided with bears and On-Balance-Volume is in freefall. 


Action in the Nasdaq has directed itself towards a period of more sustained selling, although the Russell 2000 remains in denial. None of this is unusual for a rally of this maturity (in the context of its run from November), so it's more of a question as to where swing lows may be established; for the S&P and Russell 2000, this is likely to be mid-line stochastics, although the Nasdaq may instead turn oversold before it reaches its low. 

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

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