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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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Russell 2000 Stays Pegged By Trend Resistance And 200-Day MA

There may be an aggressive long for the Russell 2000 by virtue of its under-the-radar action. Systems tracking trend breaks or moving average breaks will still be in the dark, but looking at the chart, there may be a subtle long setup. Risk-reward is easy to measure as an undercut of Friday's low (on a closing basis) would negate the traade. Initial upside target is the 50-day MA. What I also like? The uptick in relative performance over the Nasdaq.

The equal-weighted S&P ($SPXEW) and Dow Jones Industrial were pegged back Friday, but the September bounce remains in play with the 50-day MA key support for both indices. Important note, both indices are net bullish in technicals.

Things are looking at more sketchy fot the S&P. The index has given up 7,650 support and is caught in a bit of a no-mans land between 7,600 and 7,650. It will be important for 7.6K to hold, because below that you will be looking at the 200-day MA down near 7.3K. Technicals are more mixed, but the key stochastic metric I like to watch is holding the bullish mid-line; The index will become a short trade if this line is undercut.

The Nasdaq has reached a decision point. Friday comes at a divergence of support levels, a loss of which has the 200-day MA as the next target. Note, the 'bull trap' on the reversal "evening star" should see a retracement all the way back to the low of the trading range, at 24.5K. But, as of Friday's close there may be a swing trade on an options straddle, as near term things are set for a bounce.

Semiconductors have finally landed on their 200-day MA. There is a bounce trade here as this level also coincides with the July swing low. A loss of this moving averagae kick starts my measured move target into the depths of Fibonacci retracements.

Finally, Bitcoin suffered on the failure to hold the break of 20-day and 50-day MAs. It's now trading at the spike low which marked the last solid 'buy' signal on the bullish hammer at the 50-day MA. Note, if you are a long investor, this is still bullish as we are looking at a broader base recovery, but if you bought the August breakout and wanted to take profits, I don't think you would find many arguing with you on doing that.

For this week, we have 200-day MA bounce play in the Semiconductor Index, and a stealth long in the Russell 2000. An option straddle might be on offer in the Nasdaq.

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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

...And Then Sellers Pushed Hard

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I don't know if the equal-weighted S&P is a harbringer of things to come for other indices, but a second day of heavy selling has undercut the 50-day MA, and breakout support. Technicals shifted net bearish with a worrying undercut of mid-level stochastics. The next support level is down at 8,600s, but I want to see oversold stochastics on such a test. However, the ease at which existing support was lost is a concern.
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Russell 2000 and Bitcoin Break Support

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The Russell 2000 ($IWM) delivered on its 'bull trap' as the reversal came all the way back to support before undercutting $288. Selling volume was high but not excessive as the index now looks on course to test its 200-day MA. Stochastics are oversold, and in a bear move these can stay like this for an extended period - so don't be banking on a bounce. What would be bullish is if we get a 'bear trap'; i.e. a close above $287. In the intermediate term (to the end of year) we are due a tradable bounce and a 'bull trap' would set up for one quite nicely.
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