Gaps Down Put Pressure On Bulls
Declan Fallon | Sep 21, 2021 12:23AM ET
After weeks of gains which amounted to a series of low volume rises, we now find a more concerted action to the downside with gaps which may not get filled easily.
In the case of the NASDAQ we had the August breakout stall and reverse with a move below breakout support. I have drawn a secondary support line connecting the last swing lows. This can be considered support until proven otherwise. Aggressive buyers may consider a position here, but the spinning top doji is a more neutral candlestick - suggesting price action could go either way.
The S&P 500 experienced a larger gap down which undercut its 50-day MA. Technicals are net bearish with today's cut below Stochastics [39,1]. The next major support level is the 200-day MA.
The Dow Jones had already broken below support in late August - offering an indication as to what may come for the S&P. It looks like this index is heading to a test of its 200-day MA. so look for a similar move in the S&P.
The Russell 2000 also gapped lower, but as its range bound the move was of lesser significance. Add to that, it gaped below its 200-day MA on higher volume distribution, Technicals are mixed with 'buy' triggers for On-Balance-Volume and Stochastics offset by 'sell' triggers in ADX and MACD. Of the lead indices, I wouldn't be too concerned on the gap down for now.
Get The News You Want
With the Dow Industrials leading the market topping action it would appear the NASDAQ and S&P have some way to go to catch up with it. The Russell 2000 is of lesser concern as long as the trading range remains.
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.