Market Bears White Water Raft Now Dry Docked

The 50-DMA did its job!

After a perfect touchdown in the Nasdaq QQQs to the 50-DMA at 270, today, Nasdaq gained 2.92%.

All the issues for the tech drop-Softbank, overbought conditions, lack of a stimulus deal, China tensions, vaccine delays, etc. got the bears suited up for riding the waves.

However, just like what we have seen for an exceptionally long time, the market ignored everything and put those bears back on dry land.

The high in QQQs on September 2nd was 303.50.

The low was 269.66 made on September 8th.

A 50% move takes QQQs to around 281. Today’s high was 280.05.

So bears, I’d keep my life preserves on in case.

(Click on image to enlarge)

Yesterday’s price action put in a near textbook inverted doji hammer candle.

For those of you who do not know candles, an inverted doji typically means forced selling.

When it happens right on a major moving average, you should take notice.

Furthermore, the 10-DMA in magenta comes in around 289.

The other indicators on the chart are our price-performance and real motion indicators.

Price-performance shows that QQQs are now underperforming the SPY.

Real Motion shows that while QQQs held the 50-DMA, RM broke below it. That means that there is a divergence between momentum and price and that momentum is lagging.

The volume performance also broke below its moving average which indicates a waning performance as well.

Hence, two scenarios are likely now that QQQs held the 50-DMA and buying replaced selling.

First, a bear flag forms if QQQs cannot clear 281 let alone 289. In that case, the next move under 270-271 should bring the bears back into the water.

Secondly, today’s action is a mini V-shape bottom that held the 50-DMA. In that case, thru 281 you can think higher and get out quick if it fails under 277.

S&P 500 (SPYTurns out an inside day with 342.64 point to clear, 332.88 support

Russell 2000 (IWM) 153 resistance to clear and 150.50 support to hold

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Today I spoke with Jill Malandrino on Nasdaq Trade Talks.

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