Markets Enjoy Some Stability

We haven't yet a higher low from Monday's action, but today's trading sided more with demand than profit-taking. There are small victories to note, even if today's action remains inside the trading range for February. 

The Nasdaq effectively paired today's candlestick with yesterday's, adding a relative performance gain over the S&P to an improving MACD and On-Balance-Volume. Confirmation will require a close above 14,510, but today's action was enough to close the day above 20-day MA.

The S&P also managed to stabilize itself relative to yesterday's trading, but it is losing the relative battle against the Nasdaq and Russell 2000. On the positive front, it closed today above its 200-day MA but it will have to challenge declining resistance established from the December-February swing highs if bulls are to call a victory here. 

The Russell 2000 is edging towards a push above its February swing high but the first real resistance zone is in around $212 (IWM) - the series of mini-swing lows in December and January. Aside from the MACD trigger 'buy', other technicals are negative but it does enjoy relative performance advantages over peer indices. As an index, it has already experienced a bear market having fallen 22.5% from its November 2021 high to January 2022 low, so it has value as a buy-and-hold even if this particular rally fails. 

It's still early days for market declines but these loses needed to be viewed in context. For example, the hardest hit Russell 2000 (IWM) has taken a loss over 20% from its highs but is currently 23% above breakout support from 2020 and 118% above the Covid lows of that year. Context is everything and timing is a mug's game for the majority. There is no need to time the market as an investor - just buy when you have the funds to do so.

Disclaimer: Investors should not act on any information in this article without obtaining specific advice from their financial advisors and should not rely on information herein as the primary ...

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Dick Kaplan 1 year ago Member's comment

Not sure I condiser 1.5-2% swings every day as "stable."

Declan Fallon 1 year ago Author's comment

Any movement within a trading range is relatively meaningless - it's only when such support/resistance of that range is breached do you need to consider the 'what next'