👀 Copy Legendary Investors' Portfolios in One ClickCopy For Free

S&P 500, Nasdaq Form Bullish Hammer; Russell 2000 Battles 200 DMA Resistance

Published 12/01/2023, 12:51 PM
US500
-
US2000
-
IWM
-
IXIC
-

Bulls have managed to retain control of their powerful rally off October lows. Shorts looked ready to attack with the day before yesterday's bearish 'cloud cover' candlestick in the Nasdaq and S&P 500, but yesterday's action has managed to counter that without really changing the larger picture.

If you held index ETFs then the current action would be a decent opportunity to sell covered calls against your position. There may be some pullback, but it's hard to see any selling going all the way back to those October lows.

COMPQ-Daily Chart

The S&P 500 managed a bullish hammer, although when it occurs in an overbought state it carries little bullish significance, but it does negate the previous day's more bearish candlestick.

The index is in a bit of a struggle in relative performance against the Russell 2000, and given current action I would be looking for an extension in the relative underperformance of this index against Small Caps.

SPX-Daily Chart

The Russell 2000 (IWM) is in a dice with its 200-day MA. As the price squeeze was only good enough for a failed breakout, I would be looking for some easing in the price action before judging action at 20-day and/or 50-day MAs.

IWM-Daily Chart

Markets are working through an overbought state that is to be expected after the extended short-term rally we have seen. The longer markets stay at current levels, the smaller any subsequent sell-off is likely to be.

Latest comments

Loading next article…
Risk Disclosure: 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.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.