Showing posts from August, 2023

Nasdaq moves past swing high on improving technicals

Today was a good day for bulls, but there is still work to do before technicals turn net bullish. For the Nasdaq, what was particularly gratifying was the close above the high of the bearish engulfing pattern from last week, along with key moving averages. This came on the back of new 'buy' signals for the MACD, On-Balance-Volume and ADX - along with net accumulation for volume. It was a solid day, with the sort of candlestick that often represents the anchor for a swing low, but let's not get ahead of ourselves. The S&P had a similiar kind of day as the Nasdaq, packing gains on higher volume accumulation from a start at converged 20-day and 50-day MAs. ADX, On-Balance-Volume and the MACD are all on 'buy' signals with only stochastics left to turn bullish. The S&P is outperforming the Russell 2000, but not the Nasdaq. One thing to watch for tomorrow is if today's buying will act on resistance derived from the former rising channel. The

Bulls take the market for a spin, but lack revs

In principle, Friday's action was relatively bullish with some decent bullish candlesticks at support. Volume was a little mixed, in that there wasn't across the board accumulation, but we will take what we can. The Russell 2000 ($IWM) closed with a 'dragonfly' doji at its 200-day MA on higher volume accumulation. It was the second such test in a couple of weeks, which increases the probability of an undercut of the moving average. There is still good support at $179 should this happen, but I wouldn't be counting on this should the break happen.  Technicals are net bearish and Friday's action did little to improve that. 

Weak rallies carry a bearish overtone

Buyers make a reapparance after an extended period of selling. However, where in late spring and early summer any gain helped fuel a rally, this time, sellers have control of the market so that any buying will raise doubts as to its capability to dig the market out of its slump. In the case of the Russell 2000 ($IWM), we had a continuation of the bounce off the 200-day MA, although today's gain came off lower volume. The real killer is the relative underpeformance of the index against the S&P; although, in a six-month timeframe is all a bit scrappy.  While bears have an advantage, I would see enough here for bulls to take the index into a test of (soon to be) converged 20-day and 50-day MAs. 

Dow Jones Index defends support as breadth metrics stall in no-mans land.

I didn't mention this yesterday, but the Dow Jones Industrial Average has managed to defend breakout support, continuing to do so today. While other indices fluff their lines, there is still a buying opportunity for this index. While the index hs undercut its 50-day MA, one day's worth of gains would be enough to regain it. While today's volume registered as accumulation, the 'hammer' candelstick, paired with yesterday's, has the potential to be a tweezer bottom assuming a higher finish tomorrow.

Sellers have control, but buyers are not giving up.

The latter part of the week saw sellers pick up the pace, but buyers were not going to give up without a fight. In the case of the Russell 2000 ($IWM), the 200-day MA has acted as a point of action for buyers. Volume rose in confirmed accumulation, although technicals remain net bearish.

The orderly decline ends as sellers accelerate their action

What was relatively orderly selling from the July peak, has now seen an acceleration in the selling over the last two days. The volume hasn't been extensive, but it's hard for buyers to gain confidence when its one step forward and two (or three) steps back. The Nasdaq has the most room to fall. While buyers can step in at any time (creating a support level), historically, it's looking like a test of 12,250 is the next point of contact for bulls.

Sellers kept the pressure on indices, bringing higher volume distribution with it

The selling is orderly, but it's still selling. I'll keep with the Russell 2000 ($IWM) as this is the guiding (and leading) index for others. It didn't pause for long at its 50-day MA, instead, it only managed a day before delivering a clean open and close below the moving average. It's still holding $188 breakout support, but if that gives up, then we are looking at the 200-day MA.  Another point of optimism is bullish momentum in stochastics; if that can hold (the mid-line in stochastics) with a price bounce (even a price bounce without obvious price support), then an aggressive buy may not be such a bad idea here. 

S&P testing price channel support as Semiconductors struggle

Market weakness continued to strike market, but selling volume remained light. The Nasdaq moved further away from support, all but confirming the channel break, but aslo dropping below its 50-day MA. Technicals are net negative, but intermediate-lenght stochastics have some way to go before becoming oversold. While the losses are quite orderly, the could continue for a number of days, if not weeks.

Russell 2000 ($IWM) drifts out of rising channel

Bears were able to fire a shot across the bow of bulls with existing rallies for the likes of the Russell 2000 ($IWM) and Nasdaq slowed by channel breaks. While the breaks might be seen as bearish, more likely, these will represent a shift to a sideways trading range rather than a straight bearish reversal. The Russell 2000 has confirmed a break from its channel, but realistically, this channel has only been running since May, and breakout support around $188s is more important.  Today's volume ranked as distribution and technicals are net bearish, but with the 50-day MA nearby I would view this with a degree of optimism.

Indices test support as buying opportunities present themselves

The market slip-and-slide continued. Markets that were trading at 20-day MAs now find themselves down at channel support, although in the case of the S&P, the support test is breakout support - not channel support. In the case of the S&P and Russell 2000 ($IWM), today's selling volume rose to register as distribution.  Today is a bit of a last chance saloon for the rising price channels for the Russell 2000 and Nasdaq, but aggressive traders can look to go long at channnel support.  In the case of the Russell 2000, theere was a clear breach of channel support intraday, but the end-of-day close was enough to consider the index still inside support, as was the case in early July when there was a similar intraday channel breach.  

A disappointing end-of-week but markets remain inside their rising channels

Markets finished down on Friday, registering distribution for the Russell 2000 ($IWM) and S&P ($SPX), but not for the Nasdaq. From a support perspective, there undercuts of the 20-day MAs for the S&P and Nasdaq, with the Nasdaq finishing on its 50-day MA.

Vacation trading in full swing as markets drift along.

Looks like I haven't missed much since I have been away. The Nasdaq pitched sideways after tagging channel resistance. There was no change in the supporting technical picture. The S&P is running along channel resistance, drifting a little to the point of a weak MACD 'sell' trigger. However, the trend in On-Balance-Volume is nicely bullish. The Russell 2000 ($IWM) is trading in the middle of its rising channel, not doing a whole lot. If there is anything to focus on, selling of the past few days has skewed in favor of distribution, but price action hasn't broken. There is not a whole lot to add to this.  The prior trend is bullish and until we see some clear price + volume action to change this, then assume rallies will continue. 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 strateg


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