Friday's selling to evolve into support tests with Fibonacci

Bears got more out of Friday to the extent we may get the larger pullback I'm looking for.  We saw something similar in late July that didn't evolve into a larger test of June lows, but now we can look at retracements that could play into Fibonacci retracements.  With Fibonacci retracments we can look at confluence with other support zones - which increases the probability of those price levels playing *as* support. 

The Russell 2000 is the index leader.  With Fibonacci layered over the move off June lows the 50-day MA is looking like a natural support test.  This will hurt the current net bullish technical picture, but it should be better for the index in the long run.

The S&P is the next strong performer having reversed off its 200-day MA. The Fibonacci retracement level is also pointing towards the 50-day MA as with the Russell 2000.  Adding to the selling pressure is Friday's distribution day with a new 'sell' trigger in On-Balance-Volume.

The Nasdaq is tettering much more in favor of bears.  We have a relative underperformance to its peers, coming with a new MACD trigger 'sell' to join the earlier 'sell' trigger in On-Balance-Volume.  As with the previous indices, we are likely looking at a test of the 50-day MA. 

If we see a repeat of June, then Monday is going to be a big white candlestick, but I would be happier to see more controlled selling to confirm June lows as the primary low of the 2022 sell-off. 

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

S&P "Bull Trap"?

"Black Candlesticks" are a concern for the S&P and Nasdaq

Round 2 for the bearish "black" candlestick in S&P and Nasdaq


Show more