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Bull Traps for Nasdaq, S&P 500; Russell 2000 Sees Bullish Ascending Triangle

By Declan FallonStock MarketsNov 27, 2023 02:26AM ET
www.investing.com/analysis/bull-traps-for-nasdaq-sp-500-russell-2000-sees-bullish-ascending-triangle-200643885
Bull Traps for Nasdaq, S&P 500; Russell 2000 Sees Bullish Ascending Triangle
By Declan Fallon   |  Nov 27, 2023 02:26AM ET
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Whether you see the past week-and-a-half action in the Russell 2000 (IWM) as a bullish ascending triangle or pennant, it's clear there is a significant bullish turn in momentum since the early November gap higher (on higher volume accumulation).

Obviously, we can't read too much into Black Friday's trading, but we have a broader bullish picture on net bullish technicals.

Even relative performance against the S&P 500 looks to be turning in bulls favor. The only key resistance level left to break is the 200-day MA, and it is interesting that prices have stayed consistently below since the failed attempt on the inverse hammer spike.

IWM-Daily Chart
IWM-Daily Chart

While the Russell 2000 sets up for a bullish week, other indices reached a logical end point of their October-November rally. For the Nasdaq, a sequence of narrow range days above the August swing high has the potential to generate a 'bull trap' that would leave shorts with a trade (to the 20-day MA).

COMPQ-Daily Chart
COMPQ-Daily Chart

Likewise, for the S&P 500, we have August swing high to play as support, but I don't see this former resistance level has having been sufficiently breached to think buyers will step in to defend it should sellers make a run at this level.

SPX-Daily Chart
SPX-Daily Chart

Another reason to expect selling in the S&P 500 and Nasdaq is that both indices are sitting on weekly timeframe resistance.

COMPQ-Weekly Chart
COMPQ-Weekly Chart

So we have a tale of two cities; a Russell 2000 that's ready to break higher and a S&P and Nasdaq ready to head lower, at least on a temporary basis.

SPX-Weekly Chart
SPX-Weekly Chart

Bull Traps for Nasdaq, S&P 500; Russell 2000 Sees Bullish Ascending Triangle
 

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Bull Traps for Nasdaq, S&P 500; Russell 2000 Sees Bullish Ascending Triangle

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Comments (10)
ia ai
ia ai Nov 30, 2023 5:08AM ET
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PCE comes screaming today and we gap up. Your analysis is based on non-facts.
B B
B B Nov 27, 2023 4:26PM ET
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Great analysis as always, thanks for sharing!
Praveen Mittal
Praveen Mittal Nov 27, 2023 12:33PM ET
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worst technical analyst
Jeff Page
Jeff Page Nov 27, 2023 6:07AM ET
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RSI on SPX is above 70 while MFI has not yet hit 80. Pullback is expected, at least this morning. Check standard deviation bands as well. Gaps usually get filled.
kent nadbornik
kent nadbornik Nov 27, 2023 5:34AM ET
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Thx
Tim Kent
Tim Kent Nov 27, 2023 5:33AM ET
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We can see the indices reach a logical, narrow range of days that cause a typical channel lock at the resistance level. With that said, I'm not sure sellers can make the run on a weekly time frame and expect to sell. On the last graph, you can clearly see a gap breach ready to defend around the temporary 50-day MA. See! just a bunch of words.
Emmanuel Moleta
Emmanuel Moleta Nov 27, 2023 5:12AM ET
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I am buying until new all time highs. No more lows until early 2024
Saki Kalasaki
Saki Kalasaki Nov 27, 2023 5:04AM ET
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Nonsense . Just oposite .
Nov 27, 2023 2:50AM ET
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1 straight line spx down to 4100, it seems
Hamza Ali
Hamza Ali Nov 27, 2023 2:32AM ET
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i can you help me
 
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