Courtesy of Declan.
Monday’s close had all the look of a retest of last week’s spike low. And the Asian session only looked to confirm further weakness as the Chinese market continued its slump. However, bulls kicked off from the open and clawed back most of yesterday’s losses. In the end, markets are nicely placed for tomorrow, having undone the damage of yesterday.
The S&P still has a 100 point buffer before it gets to supply issues.
The Nasdaq registered an accumulation day. However it’s going to take more than one accumulation day to recover technical weakness. Relative performance has improved, but not enough to swing it to a position of leadership (still held by the S&P).
The Russell 2000 recovered to former support (turned resistance). The index has been in long standing relative underperformance, but it may be in a position to take the role of recovery leader. The index has suffered the biggest losses, having registered a 25% loss from all-time highs to last week lows, but now it may be beginning to change this story. Watch for a ‘bear trap’ if it’s able to regain support.
For tomorrow, look to the Russell 2000 to lead higher. Long time buyers can continue to look for opportunities, particularly for stocks part of Russell 2000.
You’ve now read my opinion, next read Douglas’ and Jani’s.
