The markets staged a late day rally, today. The DJIA and the Nasdaq Composite closed higher, today… albeit only slightly. The S&P 500 tried, but was unable to close to the upside. Despite today’s action, there is no significant change to the near-term outlook.
S&P 500 Daily
The S&P 500 continues to pressure near-term support near 879. Despite breaking the support earlier in the day, the index was able to rally and close just above the support level. This positive action, however, is tempered by the moving averages. The 20-day SMA is quickly falling toward the 50-day SMA and is threatening a crossover. At this time, the recommendation is to see how the S&P 500 acts tomorrow before taking sides.
DJIA Daily
Meanwhile, the DJIA continues to be displaying several bearish indicators. The average broke below the neckline of a head-and-shoulders pattern yesterday. Despite today’s late day recovery, the DJIA is still below the neckline. Additionally, the 20-Day SMA is crossing over the 50-Day SMA corroborating the bearish breakdown in the price pattern.
Nasdaq Composite Daily
Finally, the Nasdaq Composite remains below resistance near 1765. However, the hammer candlestick pattern may indicate a near-term reversal. Therefore, pending confirmation tomorrow, the recent pullback that began this month may be about to turn to the positive side. It is essential to look for confirmation tomorrow with an open and close above today’s high.
Bottom line, the markets are at a critical juncture. The bears are attempting to take control; but the battle still rages. While the DJIA has turned toward a bear trend over the last two days, the other major indices are fighting the bear pressure with the next couple days critical for determining market direction.
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I am an amateur trader and investor with over 15 years experience in the stock market. I was bred to be a fundamentalist and followed fundamental analysis until 2009. Following the 2007-2008 bear market, I began to shift from a buy-and-hold strategy to trend-following techniques.