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U.S. Indices Have Room To Protect June Lows

Published 08/15/2022, 03:19 AM
Updated 07/09/2023, 06:31 AM

Friday was a solid day for indices with the Russell 2000 (IWM) doing enough to push through its 200-day MA despite Thursday's bearish candlestick.

Small Cap trading volume remained seasonally light, but Friday's buying was enough to retain the uptick in On-Balance-Volume and the relative performance advantage over both the S&P 500 and Nasdaq. Technicals are net positive as a result. Aside from the lack of a meaningful pullback (test of support), this is solid action for the index.

IWM Daily Chart

The Nasdaq also closed above the high of Thursday's bearish candlestick, but if there is a concern it's that On-Balance-Volume has been on a 'sell' trigger since the upside breakout from the small 'bull flag'. Something to keep on for this week, although other indicators are positive. The index remains on track to test its 200-day MA, and if it can repeat what happened in the Russell 2000 it won't prove to be a barrier.

COMPQ Daily Chart

The S&P has been a laggard index given the weak relative underperformance to both the Russell 2000 and Nasdaq. The index is also working off a 'sell' trigger in On-Balance-Volume. If there is a chance for the index to regain its mojo it will be from a break through its 200-day MA. Despite weak On-Balance-Volume, individual buying days for August have skewed more in favor of buyers.

SPX Daily Chart

Indices have banked a good deal of wiggle room to protect June lows. Shorts will want to see undercuts of the May/June swing highs, but every day that passes makes the possibility of this happening even less as wannabe-buyers will be more likely to act on this test than shorts. 

Latest comments

Thanks.
The lows can certainly be retested but it will need a negative catalyst or 2 to make it happen. It would have to be something pretty bad I think.
Bottom was in June. Massive shorts trapped and will be squeezed to bankruptcy. Lots of weak sideline longs will FOMO chase. Big funds buying as well as billionaires like George Soros. Inflation peaked. Oil, commodities, gas, wheat, all down. Saudi Arabia ready to pump oil and Iran nuclear deal will lower oil even more, lowering inflation. Ukraine shipping out food exports now and Crimea exporting 50x normal wheat from stolen Ukrainian grain. Markets are forward looking. Inflation will increase revenue. Limited layoffs as well as inflation stabilizing will increase profit. This means as inflation goes down, despite Feds raising rates slower and lower, the market WILL make new all time highs. Jobs report shows no recessions any time soon. The bear market rally, as many call it, will be renamed "the start of a new bull market" WHEN, not if, new all time highs are made in just months. Buy now or buy later for a lot more money and less shares. You all have been warned.
Yep...I am thinking the same...and from media tine they start to tilt te balanced towards a new bull run😇
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