Sunday, May 15, 2022

Markets make fresh attempt at swing lows

Markets are attempting to build new swing lows from a condition of price extremes both in breadth, and relative to their long term (200-day) moving average. 

If we are to get a bottom then we not only need to see gains, but we also need to how markets react on the next loss.  The March swing low started like what we saw on Friday, but when selling emerged buyers could stop it with a consecutive days of buying - at least not until Friday.  On the plus side, On-Balance-Volume is on a 'buy' trigger. 

The S&P has been trading around a declining trendline - finishing just below the trendline on Friday. Relative performance has been a bit of a roller coaster, but while losing ground against the Russell 2000 it still holds the advantage. 

The Russell 2000 still holds the relative advantage over the Nasdaq and is making ground in accumulation (On-Balance-Volume). The index is toying with its measured move target.  This index is best placed to lead a larger recovery and (Small Caps) offer the best value for investors willing to take the plunge.

For next week we want to see this nascent gain from Friday build out into a recovery rally, but markets can take baby steps to get there.  This is a buyers market for those willing to take the risk. 

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

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Investments are held in a pension fund on a buy-and-hold strategy.