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The early November bounce triggered from tests of 50-day MAs is starting to fade. Many indices are actually trading below the start of that bounce, leaving a large area of overhead supply. While indices are struggling below the band of September-November trading, it will leave a large area of overhead supply when buyers make their return.
The Russell 2000 (IWM) finished with an accumulation day that returned On-Balance-Volumme back to a ’buy’ signal after turning net bearish yesterday. Watch for a test of converged resistance of the declining trendline and $237 resistance.
The S&P 500 drifted lower after undercutting its 50-day MA. However, it has yet to test October lows, which leaves it in a position where it may be able to successfully test and bounce from this level - ultimately shaping a sideways trading pattern. Technicals are not net bearish after today, and trading registered as a bearish distribution day.
The Nasdaq is starting to feel the heat, although the index succesfully tested the rising trendline. It’s not yet out of the woods, but technicals are net bearish, although no technical distribution. The candlestick was not one that suggested the selling is done, but if we get a bullish candlestick on the rising trendling then we may get another bounce to the 20-day MA.
The selling in the Semiconductor Index didn’t stop at the 50-day MA after Monday’s finish had the potential to be a (reliable) bullish harami reversal off the moving averages. The next support level is down at 6,000. Technicals for this index are also net bearish.
If you are looking for a long trade, Bitcoin might offer a bounce opportunity. The bounce may not last long, and if it made it back to $100K it would probably be time to take profits. The ’Death Cross’ between 50-day and 200-day MAs also points to a long-term bearish reversal. Risk:reward is measured against a loss of the spike low ($89.3K).
We are getting to a point when the dominant red candlestick from October will likely be influencing things again. It has already happened in the Russell 2000 ($IWM) to the point anyone holding a long position above $237 - all trading action for the past month - will be holding a losing position. Watch what happens when the Russell 2000 gets back to $237, because if it stalls out, then look for other indices to quickly undercut the corresponding lows of their comparable early October long red candlestick. I want to see tests of 200-day MAs, but indices (other than Bitcoin) are a long way away from them.