Strong Finish May Have Come A Day Early For Indices

person using macbook pro on black table

Image Source: Unsplash

It was a good day for bulls and I wish it was banked on Friday rather than today so that weekly candlesticks had a good finish. Instead, tomorrow will be a bit of a nail-biter to ensure by close-of-business markets finish as good as, if not better, than they did today.

The Russell 2000 ($IWM) might offer the best chance for bulls. Yesterday delivered a positive test of the 50-day MA, but today's rally closed with an indecisive doji. It was a bit disappointing to see this kind of doji so soon in a bounce. Volume climbed to register as bullish accumulation but the trend indicator ADX, has switched to a new 'sell' trigger as had intermediate term stochastics, following earlier 'sell' triggers in the MACD and On-Balance-Volume to leave technicals net bearish. The relative underperformance of the index to the Nasdaq accelerated. What I do like that the index found support defined by the September swing high.

The Nasdaq had an unsual candlestick. The bounce off the swing low finished as a "hammer", not one you typically see following a swing low as a candlestick like this is usually *the* swing low. As with the Russell 2000, today's volume ranked as accumulation, and technically, there is still a working MACD trigger 'sell'. The index is outperforming the S&P.

The S&P has shaped a more traditional consolidation and today's action did conform to a more traditional candlestick commonly seen in "bullish morning star" reversal. The index did enjoy a day of confirmed accumulation, but there was a new 'sell' trigger in On-Balance-Volume. Of the three indices I track, this is the one most likely to breakout tomorrow.

I haven't mentioned the Semiconductor Index in a while. It gapped higher in what could be said to be an "island reversal" - a generally bullish pattern - except it occurred near the end of the rally rather than the start. The trend has been strongly bullish and is once again outperforming the Nasdaq 100. There is a good chance for a test of the December high tomorrow which may see a pause in the advance.

For tomorrow, I will be looking for the S&P to be the main performer, although the Russell 2000 ($IWM) has good potential to continue its recovery.


More By This Author:

An Expected Weak Start Leaves Indices Primed For Further Selling
Weekly Charts Offer Optimism, But Weak Finish For Indices On Friday
S&P Approaches Highs As Russell 2000 Treads Water

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 ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments