An inverted hammer doji is created when the open, low and close are all around the same price.
Often, this candlestick pattern signals the end of the down move, or that a reversal is possible.
After a downtrend, this type of pattern could mean that sellers are growing tired.
Furthermore, although the last couple of days brought back euphoria into the market, with volatility hanging tough, one should be prepared for anything.
When encountering an inverted hammer, traders often check for a higher open and close the next day to validate it as a bullish signal.
As far as the inside weeks, only two instruments in the Economic Modern Family are left with that pattern.
Transportation IYT needs to clear its range-197.95-188.93.
And Granny XRT needs to clear its range-45.15-42.90.
Everyone else took out last week’s highs yesterday.
So, if IYT and XRT are signaling any impending weakness from here, watch the volatility index VXX to take out 14.75-14.86.
Otherwise, watch IYT and XRT to see if they too, can clear the prior week’s highs.
S&P 500 (SPY) New all-time highs. 332.53 as first line of support. Then lower 327.31
Russell 2000 (IWM) 165.56 key support to hold
Dow (DIA) 293.61 the all-time high and 287.72 underlying support
Nasdaq (QQQ) Another new all-time high. Must hold 226 area.
KRE (Regional Banks) 55.85 ow support to hold.
SMH (Semiconductors) 145.58 last week’s high now support to hold
IYT (Transportation) 197.95 point to clear and 195 point to hold
IBB (Biotechnology) 118 key support to hold
XRT (Retail) 45.15 point to clear
Volatility Index (VXX) Look for this to hold around 14.30 and clear 14.73-14.86