Indices pressure last Friday's highs

In many respects, today's action was better than Friday's in that effectively confirmed the strength of end of week buying from last week.  For the case of the Nasdaq and S&P we had inside (doji) days.  Ideally, the "bullish harami cross" occurs at a swing low, but what we have is something similar when considered in the context of the decline from March highs.  It will soon be time to raise the stop of the index trades. 

The Nasdaq is holding on to its breakout with the 'buy' triggers in the MACD and On-Balance-Volume retained. 


The S&P is up against declining resistance established by the March-April highs, with a challenge on resistance likely to occur before the week is out.  The 'buy' triggers in ADX, MACD and On-Balance-Volume have so far been retained.  Today's volume ranked as distribution but the candlestick is more positive. 


The Russell 2000 took the biggest hit of the day at just over 1%.  However, this loss didn't undercut the breakout and retained the 'buy' triggers in the MACD and On-Balance-Volume.  Today's volume ranked as distribution - but only just. I would be looking for more gains here, even if today's candlestick was not the best one for this.


Markets are set up for some upside follow through as rallies continue off lows.  Another day of buying would really squeeze shorts who took up positions in the last couple of weeks.  It would also attract buyers who are looking to time a bottom. 

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

Get a 50% discount on my Stocktwits premium account with 14-day free trial. Use coupon code fallondpicks at Fallondpicks Premium to get the discount.

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

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

Friday's gap downs bring indices close to support. Semiconductor Index at 200-day MA.

Image
Friday's big gaps lower have the potential to become breakdown gaps, but for now, the near term oversell has for a possible move into the gap price vacuum. The index most likely to achieve this in the coming days is the Russell 2000 ($IWM). The Russell 2000 ($IWM) finished with a neutral doji, just above its 50-day MA and in a thick band of support between $207.50 and $210 marked by the summer swing highs. Technicals have followed price action with new 'sell' triggers in On-Balance-Volume and ADX, but intermediate term stochastics haven't reached the mid-line that is typical support in bull markets. Aggressive bulls can look for a move to test the underside of the 20-day MA. The S&P was unable to hold its 50-day MA on Friday's open, and instead found itself toying with the May swing high. More significant support is likely to be found around 5,265, so if there is an undercut of Friday's low then this will be the next port of call. More concer...
Read more

Big bearish engulfing patterns as positive start negated

Image
It was a setting up to be a low key day, but come the afternoon, sellers pounced and drove markets down hard after doubts raised on future rate cuts. Fed news wasn't the key takeaway, but the loss of support was. The S&P was hardest hit, not because of the percentage loss, but because of the volatility relative to recent trading action. Today marked a clear breakdown of trendline support. It should be noted, the presence of the 50-day MA offers a point of defence but today's loss does not mean we will see a crash; a time-led consolidation seems more likely. Technically, the MACD accelerated its losses and there was a fresh 'sell' in On-Balance-Volume.
Read more

Archive

Show more