S&P 500 Set to Break Out, Russell 2000 Could Follow Suit; Nasdaq Still Indecisive
Declan Fallon | Jan 19, 2024 15:10
Yesterday was a good day for bulls and I wish it was banked today rather than yesterday so that weekly candlesticks had a good finish.
Instead, today will be a bit of a nail-biter to ensure that by close of business, markets finish as good as, if not better, than they did yesterday.
The Russell 2000 (IWM) might offer the best chance for bulls. Yesterday delivered a positive test of the 50-day MA, but yesterday'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 is that the index found support defined by the September swing high.
The Nasdaq had an unusual 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, yesterday's volume ranked as accumulation, and technically, there is still a working MACD trigger 'sell'. The index is outperforming the S&P 500.
The S&P 500 has shaped a more traditional consolidation and yesterday'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 indexes I track, this is the one most likely to break out today.
Get The App
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 today which may see a pause in the advance.
For today, I will be looking for the S&P 500 to be the main performer, although the Russell 2000 ($IWM) has good potential to continue its recovery.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.