Support test in the Russell 2000
All action appears to be focused on the Russell 2000 as it drifted toward breakout support as other indices protect their swing low rallies. The Russell 2000 nearly tagged $232 breakout support on today's spike low, but rallied back to its 20-day MA by the close.
In the case of the Russell 2000, where volume spiked it did so on days of distribution selling. We now have 'sell' triggers in the MACD, On-Balance-Volume and ADX. Not surprising, relative performance has shifted away from the Russell 2000 towards Tech and Large Cap indices.
The Nasdaq finished the day on a doji, recovering intraday losses. The index is very close to taking out the swing high, although unlike the Russell 2000 the buying did not register as accumulation. The Nasdaq is outperforming the S&P, so it will likely be the first index to make new highs.
The S&P rallied like the Nasdaq, but unlike the latter index it enjoyed confirmed accumulation on the advance. Technicals are similar to the Nasdaq with all indicators bullish except for the MACD. Doji like today's are more likely to denote strength, but we would want to see a higher close tomorrow to back up this strength; a lower close - though - would negate any bullishness from this candlestick and would more likely to lead to a run of lower prices. So what we have is a pivot swing trade play.
For tomorrow, look for buyers to keep the pressure on highs for both the Nasdaq and S&P. The value proposition would appear to be buy the breakout test in the Russell 2000 as it looks increasingly likely it will retain such support.
You've now read my opinion, next read Douglas' blog.
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