Sellers have to tire at some point and yesterday could have been that day. I’m not a huge fan of ’black’ candlesticks (higher open, lower close - but a close above the prior day’s close), but they are only really problematic at tops of rallies, not ends of declines. But for the majority of yesterday’s candlesticks, we are looking at spike lows - similar to what we saw yesterday. It will likely be a slow climb, but the risk:reward for longs looks favorable.
The Russell 2000 (IWM) has a triple spike low at the psychological support of $200. We had a capitulation volume yesterday but minor volume yesterday. We may have seller’s exhaustion, particularly as the measured move target has been reached (also near $200). Technicals are net bearish and heavily oversold. All signs point to an upcoming rally and a buying opportunity, particularly if you can get a fill close to $200.
The S&P 500 spike low has kicked in without any obvious nearby support, but the index is sharply outperforming the Nasdaq and will attract buyers.
The Nasdaq is furthest from its 200-day MA; not enough to suggest a major low, but enough for a tradable low. As with other indices, technicals are net bearish.
The other trade opportunity is Bitcoin as it recovers its 200-day MA. It has bounced off its measured move target like the Russell 2000.
The caveat might be that it has already enjoyed most of its initial bounce and might drift lower in the coming days.
Now looks to be a good time to seek buying opportunities in indices. Look to overhead 200-day MAs as the initial target and take it from there. I’m not sure there will be enough demand to take out what is likely to be considerable overhead supply given the length of time market rallies have enjoyed, but we will see.