NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

Little Room for Maneuver as Key Breakout Supports Disappear Across Indexes

Published 2023-02-22, 02:42 a/m
US500
-
DJI
-
NQZ24
-
IWM
-
IXIC
-

Tuesday was a bad day in the end for markets as it appears traders spent the Presidents' weekend stewing in their juices. 

The NASDAQ Composite broke below 'bull flag' support, but not enough to register a distribution day - perhaps the best piece of news to come out of yesterday's trading. Since the candlestick was a solid red one, I'm not convinced we will see a successful support test today, but I would give the Nasdaq until 14:00 ET (19:00 GMT) to stage a recovery if the index is down for the day; a spike low with a close at or above support would be a positive.

COMPQ Daily Chart

The S&P 500 requires much more surgery to get back to support. As with the Nasdaq, there was no distribution to mark yesterday's losses, but to make back the loss doesn't seem like something that would be accomplished in the space of a few days. There was a 'sell' trigger in the On-Balance-Volume with a pending 'sell' trigger in ADX, to add to the existing one in the MACD. The index has been underperforming Small Caps for most of 2023, but there is at least a struggle to change that.SPX Daily Chart

The Russell 2000 (IWM) had offered itself as the most bullish index, but the prior breakout was undone on yesterday's loss, not to mention, a loss of support too. Adding to the woes, yesterday's selling also ranked as distribution. At this stage, I would be looking for a test of the 50-day MA.IWM Daily Chart

As a final point, the Dow Jones Industrial Average was ready to break out, but yesterday's loss did significant damage to a potential breakout in this index. The registered distribution hasn't helped either.

INDU Daily Chart

While yesterday's losses did significant damage, one day's hit on the indices shouldn't be too concerning in the long run. I think the worry is we start to see an expanded sideways movement and a continued stall in the development of a right-hand base.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.