Bearish Candlesticks Creep In But Technicals Remain Net Bullish
Declan Fallon | May 15, 2018 12:30AM ET
Friday's action was a case of status quo, but Monday pushed things more toward the bear's favor; the series of doji and one gravestone doji are more in line with a swing highs. It does give the bulls a chance to negate what are typically bearish signals, particularly as these rallies are still relatively young.
The gravestone doji manifested itself in the Semiconductor Index. While yesterday's action also marks a short-term breakout, it's looking more likely to be a swing high; look for a gap down today (to leave a potential bearish 'evening star').
The Russell 2000 had a more bearish close (not quite an engulfing pattern), enough to confirm resistance at the last swing high in January. A push back to the 20-day or 50-day MA would be welcome. Technicals are all net bullish so the expectation is for an eventual breakout to new all-time highs.
The S&P 500 expressed a narrow doji just above the April Spring high on bullish net technicals. The picture still looks good for bulls even if yesterday was a bit of a non-event for the index.
The NASDAQ tagged resistance but was unable to break through; it tagged a minor resistance level but a move to challenge the 'bull trap' would bring the index in line with the Russell 2000.
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For today, indices have work to do to negate yesterday's generally bearish setups and break out out higher. Bulls can be aggressive in working for a breakout but even if today sees a lower finish it won't take long before a support level is hit.
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