Tuesday, March 09, 2021

Surprise buying?

Yesterday's action was unusual in that the 'bullish' hammers from Friday gave way to selling, but today's action added another layer of surprise by reversing Monday's selling with a fresh round of buying. Taking a step back and removing this noise of the last couple of days and we markets continuing their run off their highs. We are seeing a drop in volume in recent days (in both buying and selling), suggesting we are reaching the end of this particular decline. We just need a few more days like today to firm this swing low up.

The Nasdaq jumped nearly 3.5% as it makes its way back towards its 50-day MA. Technicals are net bearish and were little improved despite today's big price gain.

The S&P has made its way back to where a potential (bearish) head-and-shoulder reversal pattern could emerge. If this proves to be true then we have to see a down day tomorrow - or at least a close below the shoulder line. Technicals are mostly bearish, although stochastics are making a recovery. 


The Russell 2000 finds itself up against resistance with technicals still bearish.  While today offers a natural point for the index to reverse, it doesn't mean it will. One aspect which is bullish is the reversal from the mid-line of stochastics.


So, we have indices at natural reversal points, but this has followed from a surprise period of buying. We will know more tomorrow which side of the trade has won. 

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.

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