Friday delivered the selling the prior weeks close suggested would occur

It was going to be a tough week for markets when weekly charts were piling on the pressure.  For example, the S&P weekly chart closed with a series of red candlesticks that finished on the 200-week MA.  It's an ugly chart, but we may be in a position to see a bullish reversal; watch for a late week rally next week assuming a weak start.


And if you look at the daily chart, you can see how Friday's soft finish has set up for further losses early next week.  This was combined with confirmed distribution and a relative performance shift against the Russell 2000. However, don't be surprised if get to see some form of 'bull trap'; a move above 3,650 could be an aggressive 'buy'


If you compare the weekly and daily charts of the Nasdaq you can see the 200-week MA did play as support when it was first tested early in 2022, but not anymore.  The weekly chart still looks quiet ugly, and technicals aren't offering any reason for optimism. 



The daily chart of the Nasdaq has only iniatiated a breakdown, so shorts may feel there is more to come here (given the weakness in the weekly chart). 


The Russell 2000 is looking a little scrappy. The double bottom is still in play, although Friday's action also registered as distribution. On the positive side, it appears to be regaining its relative strength - so perhaps we are about to get some more sustained rotation into 'discounted' growth stocks.


For next week, if bulls are able to support the Russell 2000 and S&P, then we may be able to undo what is a far more bearish picture for the Nasdaq.  Having said that, daily charts do point to a likely slow start to the week, so what happens Wednesday or Thursday to set up a bullish end-of-week close is of greater interest. 

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

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