Can Tech Breakouts Occur From Here?
Declan Fallon | Sep 26, 2017 12:08AM ET
The squeeze set-up from last week which offered bulls a likely Tech breakout has now fallen back inside the prior consolidation. Bulls now have a decision to make; do they defend the rising channel, or let prices drift lower and risk a seller capitulation?
A channel break at this stage would be very concerning and would open moves to test the June and August swing lows along with the 200-day MA - each a long way from current levels; in addition, a loss of the August swing low would effectively confirm a double-top.
The NASDAQ 100 is showing accelerated losses combined with significant technical weakness. If slow stochastics [39,1] cut below the 50-midline it will confirm a net bearish turn in technicals which is usually associated with a period of multi-month downward price action. I don't want to kill the breakout chance here, but yesterday's action was particularly ugly. However, channel support is there to give bulls one last play for a push above 6,000.
The Russell 2000 got caught up in yesterday's Tech sell-off too. There was a break of 1,450 which had the makings of a Small Caps breakout, but yesterday wasn't the day to deliver on this. However, unlike the NASDAQ and NASDAQ 100 there was no real selling tied to this index either. Honors even at resistance and a neutral finish for the day.
The S&P did get caught in the Tech selling but with a breakout in play it was able to recover by the close of business. Technicals are still bullish although relative performance remains bearish.
Get The News You Want
Today will again be about Tech averages, except this time it's about defending support - not breaking resistance. If buyers defend support then look for this good will to spread to the Russell 2000 with a breakout and a successful breakout support test for the S&P. If support fails, then the Russell 2000 is likely to fail at resistance and Large Caps will struggle to maintain theirs.
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.