Fear in the air

Given the severity of the SVB inspired sell-off in the indices, I have a high degree of skepticism as to the validity of the recovery bounce over the last two days.  Buying volume is down, and has so far failed to challenge the distribution which has come before. We have had confirmed breaks of support, and those support breaks remain valid as of today.

The Nasdaq lost 11,500 breakout support but has at least managed to recover its 200-day MA. Again, I would rather see breakout support regained (now resistance), but there is a chance another days buying will deliver on this.  There is a fresh 'buy' trigger in On-Balance-Volume.  The index isn't really at a trade position, a short looks more favored, but it would be a noisy trade. 

The S&P stopped short of its 200-day MA. Technicals are net bearish, except for the strong relative outperformance against the Russell 2000.  The index is well inside its prior range, so again, this is likely to be a noisy action for the next few days (and weeks).  I would edge bullish, and there is investment potential at current levels, but it's a difficult trade. 

The Russell 2000 has suffered the most over the last few days, quickly going from a breakout, to a move back to channel support.  Technicals are net negative, and it will be a long time before they turn positive again.

The effect of the SVB banking crisis is to drop indices back inside prior trading ranges. It's not a crisis, from a technical perspective, but if we knock out last year's lows, it will be. 

Get a 50% discount on my Roth IRA with a 14-day free trial. Use coupon code fallondpicks at Get My Trades to get the discount.


Follow Me on Twitter

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

Popular posts from this blog

Nasdaq primed for breakout

S&P "Bull Trap"?

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


Show more