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.


The S&P is also at 20-day MA support like the Nasdaq, but is also at support of the December swing high.  The selling did rank as distribution, which may not be as bad as it sounds as heavier trading at support - even if it's selling - still points to strong demand.  However, the return to relative underperformance against the Russell 2000 is a concern and if we see further losses from here, then things could get ugly.


Should sellers drive further losses in the S&P, then the long awaited breakout in the Dow Jones Index will remain, long awaited.  If the Dow Jones Index was able to lead out with a breakout, it could help spark a move higher in the S&P - an index that could benefit from a fresh stimulus. 

The Russell 2000 is the only index left with a 'bull flag' breakout, that helped it with a new 'buy' signal in relative performance to the Nasdaq.  There is still the MACD trigger 'sell' to work off and it's going a little slow, but this is the index with the most bullish momentum.


For the coming week, we have indices at workable support, but the working has to start soon - preferably Monday.  Momentum traders have the Russell 2000 to trdae, but those who have missed the major breakouts from the other indices have the Dow Jones Industrial Average to track. 

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

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