Volatility Reigns But A Bounce Looks Favored

The past few days have been a marked turn from the steady gains of June/July. There does look to be a making of a swing low with some indices knocking near their 200-day MAs.

The S&P finished with a bullish hammer with a spike low that suggest 2,820s will be defended by buyers. The 200-day MA around 2,790s is an alternative so few the range between these two values as a thick paintbrush of support. Volume climbed today to register as accumulation but other technicals are net bearish with the exception of relative performance against the Russell 2000 which ticked higher; money shifting into defensive stocks. Stochastics are collectively oversold, so today's bullish candlestick at an oversold condition does suggest we will see higher prices tomorrow.

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The Nasdaq finished with a bullish engulfing pattern with a swing low support level of 7,660s - a hundred points above the 200-day MA at 7,555s. As with the S&P, technicals are bearish and stochastics are oversold; the combination with the bullish candlestick also suggests higher prices are favored tomorrow.

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The Russell 2000 is near the bottom of its trading range. It has already undercut its 200-day MA and is running out of defensive options aside from the May swing low. ROC is close to shifting back into bear market territory while relative performance is shifting back in favor of bears.

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The Dow Jones Index was interesting as it spiked to its 200-day MA with a relative performance advantage over the Nasdaq 100. Again, looks like a higher move tomorrow - or at the very least, a gap higher - is on the cards.

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For tomorrow, look for gaps higher although it may struggle to get more than that. The wide range day makes the risk:reward difficult to work with, so best to wait for a lower risk opportunity.