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.
The Semiconductor Index is the problem child. After pushing the breakout from the consolidation, it has since drifted back to the apex, cut below the 50-day MA, given up support of what was consolidation resistance -> turned support, and now again, resistance. The problem is that while support could reappear at 3,400, it's really the 200-day MA, when it converges with 3,200, that we are likely to see demand return. Until then, look for further losses.
The S&P is now down at channel support that has also converged with the June peak at 4,450. Intermediate term stochastics are also at an interesting juncture, finishing the week at bull market support (the midline). While markets are in a weakening trend I would expect some form of bounce here, even if temporary.
The Russell 2000 ($IWM) has its own support level to work with as it fast approaches its 50-day MA that is just above the June swing peak. Intermediate term stochastics is above the mid-line, and as long as this continues then Small Caps remain bullish.
We are still looking at light holiday trading, so it's hard to get too excited about any breakout or breakdown. Aside from Semiconductors, losses have been relatively orderly. I don't expect this to change unless there is a pick up in volume.
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