Losses with distribution as resistance holds for the S&P and Nasdaq

It wasn't a great day for indices, particularly as volume ranked as confirmed distribution for the S&P and Nasdaq, with daily volume traded higher than any prior buying day.  Neither market is down at key support, and as long as this remains the case this still looks like a prelude to a breakout; it would take a loss of 50-day MAs in both indices to reverse my optimism.

The Nasdaq is dealing with 'sell' triggers in the MACD and OBV, but the index continues to outperform the S&P. 


The S&P triggered 'sells' in the MACD, On-Balance-Volume and ADX to go with the increased selling volume.  While we await to see if a fresh support test is in the making, it's likely we will see such a test first in the S&P before the Nasdaq.


The Russell 2000 ($IWM) remains more problematic. We have a second day where we have had 'gravestone' doji with a large upper spikes - such spikes representing excessive supply that will be hard to shift.  My optimism for the S&P and Nasdaq does not extend to the Russell 2000.  Momentum (stochastics) is firmly bearish, along with significant underperformance to the Nasdaq and S&P.


If you look at the weekly chart of the Russell 2000 ($IWM), you can see how the index is struggling below the 200-week MA, with the 50-week MA about to bearish cross the slower moving average. 


The other struggle is in the Semiconductor Index. It has lost rising trend support on bearish technicals (bar the CCI).  This is not good news for the Nasdaq, although it hasn't yet influenced this index.  The sharp relative underpeformance against the Nasdaq 100 isn't helping.


While today's (and yesterday's) action favors bears, one days worth of buying may be enough to reverse it.  I'm still looking for breakouts in the Nasdaq and S&P ahead of further losses, but will the market deliver?

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

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

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Russell 2000 reverses off resistance

Image
The Russell 2000 ($IWM) has shaped a four month cup-and-handle pattern, but Friday's challenge of handle resistance was not enough to generate the follow through needed to continue the rally. Despite the losses, On-Balance-Volume remains on a 'buy' trigger and the MACD has the potential to offer a 'buy' trigger of its own on the next gain. However, losses did reverse relative performance away from Small Caps to the Nasdaq. The Nasdaq banked a small gain Friday on trading volume which was lighter than normal. While price action gathered little attention, there was a return to net bullish technicals with a new MACD trigger 'buy' to go alongside the earlier 'buy' signal in On-Balance-Volume. Thursday's bearish black candlestick was not good to see, but Friday didn't deliver the losses such a candlestick can deliver. I have added a support trendline that will offer itself as an additional buy zone. Momentum is strongly bullish.
Read more

Being "Right" but still losing...

Image
I'm trying the Topstep Trader Combine as a sampler to day trading and it's an interesting setup with minimal outlay costs to get started. I'm not a huge fan of their platform UI but everything else has been pretty good so far. Today was one of those days where I waiting (and waiting) for the profit taking to kick in, but by the time sellers made their appearance I had reached my loss limit for the day and so that, was that. You can see all of my whipsaw trades here. For the record, I only work off price action, looking at support/resistance and tells like rapid stop take outs, usually a good sign for a reversal.
Read more

Archive

Show more