Indices suffer sizable downward opening gaps before rallying

Yesterday was the warning shot, today was the follow through, but there was still sufficient latent demand to at least take indices near to where they finished yesterday.  While at one level we have breakdowns, if we take a step back we are looking at a return to trading ranges.  Tests of the 200-day MA are next on the list of major to-dos but it will take time to get there. 


The S&P finished below rising support on a bullish doji. There is 50-day MA support to lean on first as the 200-day MA remains a long way from current price action. Technicals are net bearish with new 'sell' triggers for On-Balance-Volume and ADX.


The Russell 2000 experienced a similar gap down but again, in the context of past price action remains range bound. One probably can't read too much into current price until either there is a loss of $208 or a push above $235. The index holds a relative performance advantage over the Nasdaq, but not the S&P.


Today's action looked dramatic for the indices, but given it occurred within the content of trading ranges its significance was reduced. Taking profits and waiting for the ranges to break, or selling covered calls, are both potential plays in the current environment. 



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

Share on StockTwits

---

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.

Follow Me on Twitter


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