Bounce runs out of steam?

Yesterday's gain marked the start of a potential swing low but there wasn't much momentum to the bounce.

In the case of the Nasdaq we had a 'gravestone doji'.  While this candlestick did not occur at a swing high or on overbought momentum, it's not one to inspire confidence on day 1 of the bounce. Technicals are firmly net negative, so expectation is for a downward move tomorrow.

It was a similar predictament for the S&P as it closed with a bearish 'inverse hammer'.  The rebuttal came at the 50-day MA and shorts may be looking to have a go here.  The 200-day MA is the downward target although On-Balance-Volume managed a 'buy' signal in the face of bearish technicals elsewhere. 

The Dow Industrial Average has gone down a different route and has morphed more into a sideways pattern.  This may be a guide as to what we may expect from the S&P going forward.  The index has been curtailed by the 50-day MA and the 'bull trap' remains valid, although the fact it didn't go through its 200-day MA and 33,300 on confirmation of the trap is a positive. 

The Russell 2000 does as the Russell 2000 does. Range bound and caught in the middle. Only the 200-day MA is offering any kind of technical support from within its 2021 trading range. 

On the current decline I still think a test of the 200-day MA is favored, but if tomorrow doesn't deliver a down day on what today were bearish candlesticks in the indices, then we can view things in a more positive light. 

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

Nasdaq primed for breakout

S&P "Bull Trap"?

"Black Candlesticks" are a concern for the S&P and Nasdaq


Show more