Was It A Relief Rally?
Declan Fallon | Jul 28, 2015 11:55PM ET
Big gains yesterday and a strong reversal in the Russell 2000 puts a potential bottom in play. The Russell 2000 started the day below the 200-day MA, but then rallied to claim a spike low and a close above this key moving average. Small Caps are a key driver in trend cycles.
The 'bull trap' from June is still dominant, and a push above 1,280 looks a tall order. But reversing the breakdown of the rising trendline at 1,240 is a different proposition. If it fails at this, then a swift return below the 200-day MA, and then some, opens up. And the long awaited intermediate term decline begins.
The S&P gained over 1% with a second bounce off the 200-day MA. But, it's a bounce which has come a little soon given the last test of the 200-day MA was earlier in the month. Supply kicks in on a move above 2,100, and the 50-day MA is also lurking around this price level to offer resistance. Technicals are net bearish. My hunch suggests the sellers are going to regain control, but bulls will be looking to press yesterday's advantage.
The NASDAQ closed the gap from Monday, but there is more work for bulls to do. The 'bull trap' above 5,200 is dominant, but yesterday's buying amounted to a successful defense of converged 20-day and 50-day MAs. However, a test of the 200-day MA is long overdue.
The Semiconductor Index had a tricky day. It gained against recent day's losses, but it hasn't really offered the makings of strong bottom, at least not yet. This will make a recovery in the NASDAQ and NASDAQ 100 more difficult.
Get The News You Want
For today, assuming no shocks during the pre-market, bulls have a chance to continue with the work they started yesterday. Short covering will drive the early action, but as highs are approached, fresh buyers will emerge.
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.