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Friday's Selling To Evolve Into Support Tests

Published 08/22/2022, 03:29 AM
Updated 07/09/2023, 06:31 AM
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Bears got more out of Friday to the extent we may get the larger pullback I'm looking for. We saw something similar in late July that didn't evolve into a larger test of June lows, but now we can look at retracements that could play into Fibonacci retracements. With Fibonacci retracments we can look at confluence with other support zones - which increases the probability of those price levels playing *as* support. 

The Russell 2000 is the index leader. With Fibonacci layered over the move off June lows the 50-day MA is looking like a natural support test. This will hurt the current net bullish technical picture, but it should be better for the index in the long run.

IWM Daily Chart

The S&P is the next strong performer having reversed off its 200-day MA. The Fibonacci retracement level is also pointing towards the 50-day MA as with the Russell 2000. Adding to the selling pressure is Friday's distribution day with a new 'sell' trigger in On-Balance-Volume.

SPX Daily Chart

The Nasdaq is tettering much more in favor of bears. We have a relative underperformance to its peers, coming with a new MACD trigger 'sell' to join the earlier 'sell' trigger in On-Balance-Volume. As with the previous indices, we are likely looking at a test of the 50-day MA. 

COMPQ Daily Chart

If we see a repeat of June, then Monday is going to be a big white candlestick, but I would be happier to see more controlled selling to confirm June lows as the primary low of the 2022 sell-off.

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