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A Range Of Market Scenarios In Play

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The week finished with markets in a number of difference scenarios.  In the case of the Nasdaq, the rally has returned to former 3-month support - now resistance.  Volume climbed to reigster as confirmed distribution.  It came on a back of a MACD trigger 'buy' and an On-Balance-Volume 'buy' trigger.

Tightening range as gaps fill

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While markets may be feeling the pinch of the gap fill from the swing low rally, we have a narrowing of the intraday range in an attempt to confirm support from the gaps.  In the case of the Nasdaq, we have the gap fill on declining volume which is a point of optimism that what we have is a valid swing low. Technicals are net negative and relative performance is not improving enough to suggest we may have a real swing low, but take things one step at a time. 

Small bearish engulfing patterns for markets

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In candlestick terms, markets finished Friday with a series of bearish engulfing patterns against Thursday's 'real body' finishes. It did put a bit of a dampner on Thursday's bounce although the extent of the losses were relatively minor. Watch for a test of the gap early next week.  Aggressive traders could 'buy' the test and set a stop on a loss of the swing low at 14,100, although a close below the gap would probably offer enough reason to sell before the stop. 

Bounce runs out of steam?

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Yesterday's gain marked the start of a potential swing low but there wasn't much momentum to the bounce. In the case of the Nasdaq we had a 'gravestone doji'.  While this candlestick did not occur at a swing high or on overbought momentum, it's not one to inspire confidence on day 1 of the bounce. Technicals are firmly net negative, so expectation is for a downward move tomorrow.

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