Sell The News. Nvidia Can't Save Market - Worse To Come?

The pre-market optimism didn't last long, but when markets are coming off an extended high it's hard for buyers to return there, even off the back of 'good news'.

The Russell 2000 ($IWM) opened bang on resistance at $237, and then it was all down from there. Volume surged in confirmed distribution, leaving the 200-day MA as the next logical support level.

The S&P has created some symmetry with a second red candlestick, practically a carbon copy in price to the one in October. This has the look of a head-and-shoulder reversal pattern with a measured move target that takes it down to its 200-day MA, and maybe more. However, it hasn't lost neckline support yet; a rally above 6,755 would negate this bearish pattern.

The Nasdaq took it worse than the S&P. A sizable bearish engulfing pattern that resulted in an undercut of the rising trendline leaves bulls in a quandry. Any trader holding a long position since September are likely underwater with their position, which will add to the selling pressure for the index. Similar to the S&P, a measured move target will bring it back to its 200-day MA.

Hardest hit was Bitcoin. It gave up 5% on the day, slicing through the spike lows of the past two days and leaving it in a spot of bother. Watch for a bullish hammer tomorrow. The cryptocurrency is heavily oversold on capitulation volume, but catching a knife is always a dangerous thing.

The Semiconductor Index is another index aiming for its 200-day MA if today's selling follows through tomorrow. It would take a substantial level of selling to get there, but it would take much more to turn it into a major swing low.

Nvidia's results were meant to be the catalyst to bring markets back toward their highs, but instead, it had the reverse effect. Markets were extended heading into today, and they are still extended - relatively - despite today's losses. Watch for a follow through lower, likely early next week, that will accelerate things downward. This is not a buyers market.

More content here

---

Follow Me on Twitter


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

Popular posts from this blog

Upcoming "Death Cross" for Russell 2000 ($IWM)

Image
There was some modest buying today from the open, but volume was light and markets are below trading range support established during the latter part of 2024. It's hard to see where the buyers are going to come from given the chaos of Trump. I should add, I listened to Josh Brown's The Compound podcast and he showed an interesting chart of market returns in April-May in the year following a strong return in markets; in essence, selling to pay capital gains tax. Given the precarious nature of markets, and the possibility for this seasonal factor to play out, it's likely we have a couple more months of downward action before value buyers return. If we look at individual markets, the Russell 2000 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
Read more

"Dead Cat" Bounce or Something Better?

Image
It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.
Read more

S&P 'Bull Trap' Prevails As Recent Challenge Fails

Image
We are two-for-two for the S&P pushing beyond 6,100 resistance - this week was nearly an exact repeat of last week - just as things looked ready to push on, sellers returned. Supporting technicals are net bullish, which leaves just price to do its thing. What happens at converged 20-day/50-day MAs will be important, because there can only be one winner here.
Read more

Archive

Show more