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Bulls Were Unable To Build On Morning Optimism

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After the Fed driven sell-off that delivered support breaks for some of the indices there was an attempt by bulls to stage a bounce, but traders weren't able to build on the sizable opening gaps, and some indices drifted lower by the close. The Russell 2000 ($IWM) lost the most ground off the open. However, today's close was enough to regain support, leaving yesterday's action as a potential 'bear trap'. Technicals are net bearish oversold. And today's buying volume was below yesterday's selling (distribution). The S&P finished the day where it started, which is also 20-day MA resistance. Aggressive traders could go with a swing trade as the next move could be sizable (particularly if the move is higher). The Nasdaq is dominated by the trading range, but within that we have a consolidation triangle. As it stands, the index is at resistance of this triangle, and given recent selling volume I would be looking for a move to close today...
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Markets Test Wiggle Room

With the selling pressure we have seen it was no surprise to see markets record a loss. The degree of selling was relatively modest, but it does put indices in a situation where they need to test the strength of the recent swing low. This may take 2-3 days to play out.

The Russel 2000 ($IWM) had the most modest loss of the indices and has a good chance of defending $200. Volume has been declining since the capitulation volume low, suggesting the selling is near done (for now). The MACD will likely trigger a 'buy' tomorrow.

The S&P has still a few days worth of selling before it gets to test the strength of its swing low.

The Nasdaq has perhaps one more day before it tests the low. I will be looking for a spike low in an ideal retest.

The final chart I'll leave you with is the Nasdaq Volatility index. It has cleared declining resistance in a marked acceleration, alongside an upcoming cross of the mid-line in stochastics; be ready for a spike in volatility.

For tomorrow, look for further losses. An ideal scenario will be spike lows on bullish 'hammers' or doji. A more bullish rally off the bat sets up for tests of overhead moving averages. What happens after the first half-hour of trading is likely to set the tone for the rest of the day.

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

Popular posts from this blog

Bulls Were Unable To Build On Morning Optimism

Image
After the Fed driven sell-off that delivered support breaks for some of the indices there was an attempt by bulls to stage a bounce, but traders weren't able to build on the sizable opening gaps, and some indices drifted lower by the close. The Russell 2000 ($IWM) lost the most ground off the open. However, today's close was enough to regain support, leaving yesterday's action as a potential 'bear trap'. Technicals are net bearish oversold. And today's buying volume was below yesterday's selling (distribution). The S&P finished the day where it started, which is also 20-day MA resistance. Aggressive traders could go with a swing trade as the next move could be sizable (particularly if the move is higher). The Nasdaq is dominated by the trading range, but within that we have a consolidation triangle. As it stands, the index is at resistance of this triangle, and given recent selling volume I would be looking for a move to close today...
Read more

Nasdaq Surge Delivers Breakout

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So much for the questionable breakout in the Nasdaq or the potential short play in the S&P, both were swotted away with substantial gains in each index. There remains doubt across both indices, but if each are able to retain the bulk of their gains over the coming days then the bearish thesis will be much weakened. The Nasdaq was the biggest mover over the past couple of days was the Nasdaq. The doji breakout was a non-issue and those who bought the 26K tests will be sitting pretty. Today's gain was enough to register a new high breakout, but it's vulnerable to a 'bull trap', particularly if sellers are able to drive the index back below 27K. However, we did see a new MACD, On-Balance-Volume, and +DI/-DI 'buy' signals, returning technicals to a net bullish state.
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Bitcoin Surge As Russell 2000 Shapes A Swing Low

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Bitcoin is again on the move, looking more bullish than my initial "bullish outlook". I had looked for a more pronounced 'bear trap' on a duck to the 50-day MA, but instead buyers stepped in and shorts were forced to cover buy. This is excellent right-hand-base development on the longer weekly chart, and it's hard not to see Bitcoin challenging $125K by 2028, if not sooner. It will still be volatile, but long-term investors waiting for a new entry opportunity should wait for prices to narrow again in low volume, then buy-and-not-look-back. Long term buyers should not get sucked into the daily machinations of cryptocurrencies, and should have a proper long term outlook of years - not months or weeks... Anything shorter will need to use adequate risk:reward. If I was to stick my neck out, I might look for $100K for end-of-year and measure risk based on that target. As an asset, I hate cryptocurrencies (and the sphere around them), but they do appear to be influenc...
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