Category: Action Reports

Action reports, market updates, and new news

Stock Indices Pause Just Above Important Key Reference Area

The Stock Indices broke out on Wednesday. Since then, the SPY and QQQ have paused just above important support. The IWM is yet to breakout. Volume is low and the other internals are diverging. However, this is not uncommon in a rotational pattern. The pause for the last two days offer good trade location in terms of a multi-timeframe breakout. If there is a move higher, it will be extremely important for the internals to strengthen to support the move. If support, that was resistance, is traded through, it will suggest the potential for a rotation lower. On the other hand, if the uptrend is to continue, we will need to see additional gains soon.

Stock Indices Grind Higher As Internals Weaken

The Indices closed this week attempting an assault on the all-time highs. However, volume continues to collapse as market breadth declines. The percentage of stocks above their 50-day and 200-day moving averages are diverging as well. While the Spiders have exceeded a three-step equality, the QQQs and IWM are still within that strategy. If there is going to be a breakout to new highs, the internals must strengthen. On the other hand, if there is another rotation lower, the lack of selling pressure must be overcome, otherwise we will simply be stagnant in a rotational pattern for a while.

Stock Indices May Be Completing A Countertrend Rotation

The Stock Indices appear to have completed a longer-term countertrend rotation. Volume is collapsing suggesting buyers are running out of steam. What would suggest this is not the case is trading higher than today’s close and volume beginning to increase. Tomorrow could be a very important day in determining whether we are going back to the highs or another rotation down is in the offing. On any higher high, watch volume carefully.

Stock Indices Appear To Be Completing A Countertrend Rotation

The Stock Indices today opened right into a Key Reference Area I discussed in the Briefings this week. They bounced off of that area. Today’s Briefing outlines a possible upper resistance area that is critical. I expect there will be additional buying tomorrow. If volume and breadth do not confirm that buying, expect the possibility of another thrust lower once this move is complete. On the other hand, if the internals confirm any additional move higher, and if resistance is traded through, then the low is in and we are headed back to test the highs. Tomorrow will be very important.

Stock Indices Continue To Slide As Market Breadth Strengthens

The Indices continued their slide this week and closing today near the lows of the day and week. Volume is now beginning to increase, suggesting the selloff is beginning to attract more sellers. The problem is Market breadth is continuing to increase. This is a divergence that gives me some heartburn because it means there is part of the Market that is beginning to strengthen. If there are lower prices next week, I will be using caution unless or until I see breadth begin to weaken as well. On the other hand, the Briefing outlines important resistance levels should there be some type of move higher.

Market Internals Weak As Price Hits Important Support

The Indices continued their slide today, supported by a continuation of weak internals. Additionally, important support was broken. There are three possible scenarios. 1) The Indices are oversold and the countertrend rotation down is complete. A lower low tomorrow would suggest this is not the case. 2) The Indices are oversold and they will rotate higher to work off the oversold condition before another thrust lower. 3) The recent selloff is not a countertrend move but a developing new bear trend. Analysis of price development over the next several days will give us a clearer picture of which possibility is becoming the higher probability.

Stock Indices Recover From Previous Day Selloff

The divergence in market breadth discussed in last night’s Briefing had more influence over today’s trading than anticipated in yesterday’s Briefing. Instead of a lower low and diverging breadth today, the Market started climbing from the open. While volume was lower and breadth not that strong, price traded through resistance and closed near the highs of the day. This suggests the current uptrend is still intact, unless or until lower support levels are broken.

Fear Enters The Market. Important Short-Term Support Broken

Based on fear of an increased Mid-East conflict, sellers took control of the Indices today. Volume exploded and breadth fell off. It was interesting the Indices opened today and tested important resistance and then in the afternoon sold off significantly. While there is a divergence in breadth at the close, that could be eliminated at tomorrow’s open. If not, expect some type of pause or rotation to correct the selloff today. The first hour of trading tomorrow will be very important.