Channel resistance comes into play for S&P and Nasdaq

Including channel resistance in charts can be a bit of a mixed blessing. On one hand, it gives an indication as to when sellers can be expected to make an appearance in a rally. On the other, it can force you out of a position right before a rally accelerates.

The S&P is underperforming relative to the Russell 2000 ($IWM), and yesterday's doji made a picture perfect tag of channel resistance, that delivered with selling today.  If one was to look where buyers might come back, the 20-day MA is looking a good place to start; a bounce here would put a squeeze for a channel resistance breakout and an acceleration of the current rally. 

The Nasdaq is in a similar predictament to the S&P, working off the 20-day MA as it looks to challenge for a channel resistance breakout.  Technicals are net bullish, but the index has started to underperform relative to the S&P. 

The Russell 2000 ($IWM) hasn't got the maturity in the rally that the S&P and Nasdaq enjoys, so today's selling hasn't honored the nascent channel I have drawn.  Having said that, I'm far more interested in seeing $189 breakout support hold than the current channel. 


Blog traffic is well down on my normal baseline traffic, reflecting the large number of people enjoying vacation time in a (relatively) Covid (remember Covid) free summer.  Given that, I would not be expecting any major changes in the indices until post-Labor day in September. 

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

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

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

Archive

Show more