Showing posts from February, 2023

Eesh, today's bearish candlesticks are a problem

I don't like seeing 'black' candlesticks as they reflect a failure of opening strength, and today was one of those days.  'Black' candlesticks are more of a problem at the end of the rally than at the start, but if we see a gap down tomorrow there won't be much support to lean on.  The S&P and Nasdaq might yet see another test of the 200-day MA tomorrow. However, if there is a close above today's high, the bearishness of the 'black' candlesticks is negated.

S&P and Nasdaq lean on 200-day MAs

Friday saw indices take another hit lower, but most of the damage was done at the open (with gaps lower) and by end of day, the S&P and Nasdaq finished with small doji, rather than any more catastrophic candlesticks. The Nasdaq is still close enough to key breakout support that a rally on Monday could see this support regained and a 'bear trap' established. It will have to be the next one or two trading sessions for this to be confirmed.  Any further loss now would instead open up a test of the 50-day MA, and potentially, a move back to 10,600s. Futures are looking good for a bounce, so let's see what the day brings.

Markets find support at Nov-Dec peaks

It was a bit of a sketchy day for markets, but they were able to recover by the close of business.  I would have preferred markets to have honored my earlier drawn 'bull flags', but markets don't do what you want, so instead, we have to play by the rules they give us.  The Nasdaq has managed to dig in at support defined by the swing highs of November/December, but also the 200-day MA. Today's candlestick registered as a bullish hammer and there was a new 'buy' tick in On-Balance-Volume. The index continues to outperform peer indices. 

Room for maneuver lost as key breakout support disappear across indices

It was a bad day in the end for markets as it appears traders spent the President weekend stewing in their juices.  Not all markets lost support, but there wasn't a whole lot of positives coming out of today.  The Nasdaq broke below 'bull flag' support, but not enough to register a distribution day - perhaps the best piece of news to come out of today.  Because today's candlestick was a solid red one, I'm not convinced we will see a successful support test tomorrow, but I would give the Nasdaq until 2pm to stage a recovery *if* the index is down for the day; a spike low with a close at or above support would be a positive. 

Markets hold breakout support, but limited room for maneuver

Markets took another loss on Friday but there was no change in the larger picture.  The key breakouts remain intact, and we are still waiting for the Dow Jones Industrial Average to make its move, but it remains close. In the case of the Nasdaq, I have redrawn the boundaries of the 'bull flag' to consume the early - now failed - move from the consolidation.  Friday's finish didn't break support of its 20-day MA and from a volume standpoint, didn't rank as distribution.  Techniclals have a 'sell' in the MACD, but its the relative performance advantage which likely holds the key as to which direction we can expect the 'bull flag' to break.  Optimistic.

'Bull Flag' breakouts hit a road block

Yesterday's gains offered classic 'bull flag' breakouts, but today put a dampner on many of those market moves.  The Russell 2000 opened near the low of Wednesday, and despite an intraday surge to yesterday's highs, it found itself closing just below it's open price - registering a distribution day in the process. Technicals haven't changed, although relative performance is improving against the Nasdaq.

Nasdaq, S&P and Russell 2000 all shape 'bull' flags

As markets retreat back to support, they do so by building 'bull flags'.  This action - if it delivers the expected breakouts - will open up for measured moves higher. In the case of the Nasdaq, we have a measured move target around 14,000.  However, there is a 'sell' trigger in its MACD, but this shouldn't offset the strong relative performance of the index to the S&P. 

Russell 2000 and S&P successfully test breakout support

A good end-of-week finish for markets offered positive tests of support to head into next week with. The Russell 2000 tagged breakout support defined by November's swing high and 20-day MA. Volume steadily declined off the reversal from the $199 high - another positive - although the MCD trigger 'sell' was a little disappointing.

Inside day losses

The December rally, which was looking vulnerable as of Monday, managed to resume its trend before giving back some of those gains today.  I'm still looking for a larger move back to retest breakout support, which may start as of today, but today's selling volume was well below recent buying - so the percentage loss looked worse than it actually was. The Nasdaq loss did little damage to the technicals and relative performance continues to surge. The 20-day MA is crossing above the 200-day MA, so the 20-day MA is likely to be the first area of potential support to be tested should the current selling continues. 

Tentative steps lower for markets

It could have been worse, the potential for losses was quite high but markets were reluctant to give in to sellers, many markets finished where they started. The Nasdaq was a case in point. Selling volume was lighter than Friday's as the index closed the breakout gap from last Wednesday (an intraday chart will show this better).  This should give swing traders an opportunity to trade the next move - using the high/lows of today to determine the entry point and risk (buy break of high - stop on loss of low / short loss of low - stop on break of high).  Technicals favor bulls, so the long trade is more likely to succeed. 

Market surge continues

Friday delivered a small riposte to Thursday's big gains, but this rally from December lows needs a larger consolidation to help digest those gains.  There is solid support established by breakouts and the moving averages, so if things stall out here I wouldn't be too worried; only if we lose all the moving averages (which would also take out breakout support), that a recovery would take longer than just a few weeks.  The Nasdaq is the market leader with net bullish technicals. If Friday's losses were the start of something more, then a retest of 11,500 would be very welcome, and a spike low below 11,500 even better.  The 50-day MA would also offer a good test to wash out weak hands.

S&P Breakout joins Nasdaq and Russell 2000

Buyers returned after the brief visit of potential `bull traps` across indices.  Yesterday's action delivered the breakouts and today's was the icing on the cake.  The one index which did break today was the S&P.  The S&P breakout followed two days of buying on higher volume accumulation.  The concern is the expanding relative underperformance to peer indices, but the chart breakout looks good and support at 4,000 should be good for measuring risk:reward.  There is also going to be a "golden cross" between 50-day and 200-day MAs over the next couple of days. 


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