Wednesday, June 08, 2022

Bull Flags for Nasdaq and S&P

The last few days have seen the S&P and Nasdaq consolidate their bounce with 'bull flags'. Both markets are coiling in preperation for a follow through move - presumably higher. 

In the case of the Nasdaq,  we have 'buy' triggers in the MACD, On-Balance-Volume and +DI/-DI - although stochastics are struggling to cross the mid-line. The index is outperforing the S&P which should favor a move higher and a challenge of the 50-day MA. 


The S&P is in a similar predictament as the Nasdaq. Its `bull flag`is getting ready to break declining resistance but is backed by 'buy' triggers in the MACD and On-Balance-Volume. Note, once it does break through it will run into resistance of its 50-day MA.


The Russell 2000 is not shaping a 'bull flag' and is up against declining resistance.  It did manage to negate the bearishness of Monday's 'black' candlestick, but today's inside day would also be considered a bearish reversal.  Look for a loss tomorrow but the 20-day MA is there to help should this be the case. 


The last few days have seen a back and forth in the development of the consolidation for both the S&P and Nasdaq, and as things stand, neither bull nor bear has the edge.  However, we have to consider recent action, and while the longer term action is a decline, the move off the lows looks like it will be the next dominant move. I will be looking for an upside breakout. 

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

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