I don’t like when markets gap higher, lose momentum, but hold a higher close; this leaves them vulnerable to more selling the next day, particularly if such action occurs at the end of a rally (in an overbought state). We don’t have this as markets have been range bound for a couple of weeks, even if overbought on intermediate stochastics, but we need to be watchful.
The S&P 500 has been lingering near its 200-day MA as the 20-day MA fast approaches.
There is a ’sell’ trigger in the MACD, but other technicals are positive, including a particularly strong volume trend. While I would be bearish under such scenarios, this index is still in a bullish setup.
Likewise, the Russell 2000 (IWM) is holding above its 20-day MA as it musters a more bullish ’hammer’ on higher volume accumulation.
There is a MACD and On-Balance-Volume ’sell’ trigger alongside relative underperformance to the Nasdaq. As with the S&P 500, I do have a preference for a move higher, at least until the 200-day MA is reached.
The Nasdaq is perhaps more bearish despite been the index outperforming its peers and is net bullish technically.
Yesterday’s gap higher had managed to break the range before the index closed back inside the prior range. The index is more likely to drop back to test moving averages before making a new high.
One asset triggering a short, particularly if it makes it back to 107,500 in an intraday move, is Bitcoin. The rising channel is breached alongside an undercut of the 50-day MA. Technically, there was a ’sell’ trigger in the MACD.
For today, shorts have the Nasdaq and maybe Bitcoin to play with. Bulls have the Russell 2000 and S&P 500. What happens after the first half-hour of trading will determine what comes next, whether you should trade with the bullish or bearish side of the aforementioned assets.