Courtesy of Declan
While most indices were able to post small gains it was left to the Semiconductor Index to post a small loss; leaving a bearish engulfing pattern at its 50-day MA and an ideal opportunity for shorts to take advantage of the new (intermediate) downward trend. In such a scenario look for stops above the 50-day MA. The flip side, if there is an early push above the 50-day MA then these same short-stops are likely to trigger an acceleration in the rally and bring fresh buyers in a new long trade; a long trade working off oversold conditions.
Not much of interest from other indices. The S&P rallied in modest fashion which gives existing longs more leeway should bears make a return.
The Nasdaq closed with a 'black candlestick'. This is typically bearish and given its proximity to the recent all-time high is in itself a shorting opportunity. Unlike the Semiconductor Index there isn't the same lead-in bearishness or 50-day MA to lean on but with a stop on a break above Friday's highs it's a doable shorting opportunity.
Finally, the Russell 2000 pushed back into last week's 'bull trap' but there is still plenty of work to do before longs can negate it. However, shorts don't have a clear play as the risk:reward isn't great given the spike high would have to be factored in. The net result is probably another small gain. Note the MACD is still on a 'sell' trigger along with a bearish -DI/+DI.
For Monday, a flat open or gap higher which fails to gain momentum after the first half-hour will offer itself as a good shorting opportunity for both Semiconductor Index and Nasdaq. If markets can hold gains after the opening half-hour then a string of short covering moves is likely for the Semiconductor Index and the Russell 2000 is probably another edging in favour of bulls.
