When markets get narrow and tight then the next move will be a big one. Unfortunately, after the weekend action in the Middle East that next move is looking like it will be lower. The problem with the U.S. bombing of Iran is that finding the positives is hard given the ineptitude of current leadership. Bitcoin was the first to show its hand as the trade range morphed into a breakdown.
The U.S. is packed with under qualified people in power with no oversight, and there is only so much head-in-the-sand action you can take before it begins to tickle you in the ass. The difficulty for Elon-bro loving Bitcoin is that we have an undercut of the June swing low on net bearish technicals. Back in April, the selling generated a buying opportunity, but no such opportunity exists here - at least - not yet. If you are a stick-in-the-mud bull, then the 200-day MA is a possible buying opportunity.
But before I moan so more, we have to adopt the J.C. Parets rule that your politics is irrelevant to how you should invest/trade and detrimental to your returns. Given that, it will take Monday’s close before we can see the true impact of the weekend’s Iranian action.
The Russell 2000 (IWM) is resting on its 20-day MA and will likely see a hard loss on its way towards its 50-day MA. Look for a fresh ’sell’ signal in On-Balance-Volume and probably +DI/-DI to go with the ’sell’ signal in the MACD.
Options expiration spiked volume so that there was a ’sell’ signal in the S&P 500, with +DI/-DI very close to a ’sell’ signal of its own. Monday will likely see larger losses and a move to test the 50-day MA.
The Nasdaq is a little more bullish than the S&P 500, but it’s unlikely to escape the selling to come Monday, and will have fresh ’sell’ signals to navigate.
But as markets are quick to show, even before the bombing of Iran, Nasdaq breadth metrics generated ’sell’ signals - just take your pick - market action leads the news.
Going forward, sellers will likely be in control on Monday, but we need to see how this is reflected in challenges of support and resistance, and moving average support in particular.