Support break for Nasdaq and S&P

Indices have gone from new high breakouts, to 20-day MA tests, to breaks of trendline support - weakening at each step along way.

The Nasdaq finished Friday with a loss of the 50-day MA after trendline support gave way on Thursday.  Friday's volume was relatively light, but there was confirmed distribution on Thursday's selling.  Technicals have taken a marked step lower, especially the MACD - although On-Balance-Volume is hanging on to its 'buy' signal. Intermediate stochastics [39,1] just undercut its mid-line, although a rally tomorrow would be enough to see this as the start of support for a secular trend pullback (although such a pattern would take time). 

The S&P broke rising trendline support from November, but it still managed to a successful test of 20-day and 50-day MAs. While Friday's selling successfully tested 20-day MA support, it did register as confirmed distribution - enough to confirm the 'sell' trigger in On-Balance-Volume. More worryingly, this fed into the sequence of distribution days which have piled in for the latter part of February. This added pressure fed into the existing 'sell' triggers for the MACD and ADX.  Although there is a slow relative recovery against the Russell 2000 - but no new 'buy' trigger here yet. 


While there was selling in the Russell 2000, there wasn't a loss of trendline support - which remained just below its 20-day MA.  The 50-day MA remains some distance away, although the MACD and On-Balance-Volume remain on established 'sell' triggers despite a strong relative performance to the Nasdaq (and S&P).


The last two days delivered a sharp reversal in the Dow Jones Industrial Average. The MACD and ADX are on 'sell' triggers, but On-Balance-Volume is on a 'buy' trigger and a sharp advance in relative performance to the Nasdaq 100. 


Can bulls make it back above support? Further losses will confirm the support break and force weak hands to sell - fueling more selling.  The next logical support point are 200-day MAs, but it would take a big percentage loss in indices to get there. 


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

Share on StockTwits

---

Follow Me on Twitter

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.


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