Monday, May 30, 2022

Markets breakout from preliminary bottoms

It's early days but Friday's close into the long weekend generated some solid bottom breakouts.  The Nasdaq, S&P and Russell 2000 all made positive resistance breakouts from their swing lows as technicals began to improve. 

The Nasdaq closed above 12,000, and cleared declining resistance established from the March high. This came with a MACD trigger 'buy' and On-Balance-Volume 'buy' trigger.  This is looking better than it did in March when a similar breakout was attempted, but the index is now trading at better value. 

The S&P similarly cleared its reaction swing high as part of its bottom formation. There were technical 'buy' triggers for the MACD, On-Balance-Volume and the ADX as part of this move.  Unlike the Nasdaq, however, it hasn't yet cleared declining resistance from the March high.

The Russell 2000 wasn't to be left out of market gains as it cleared the most recent swing high. This came with 'buy' triggers for the MACD and On-Balance-Volume too.  Of the indices, it's the one leading the pack. 

We have an important alignment in markets as each work off their recent lows on solid technical improvement.  As resistance levels are ticked off, sideline money will become more engaged to participate and shorts will need to cover.  I had said in recent weeks investors should be buying, now it's looking better for traders too. 

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

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