Note: I’m taking Friday off for expiration (and my sanity) so there won’t be a watchlist tomorrow.
I knew that this week, with expiration and several economic reports, had the potential to be wild and is sure hasn’t disappointed. After today’s big rally the market is basically right back to where it began the week. The weekly charts show hammers with long wicks, very similar to last Thursday’s action. All the downside drama this week and now it’s like it never happened.
Those reversal candles are a positive for the bulls but they still need to confirm those candles by getting a higher weekly close. The daily charts show that the indices are right under resistance, so the bulls have their work cut out for them. One level that many traders will be keying off of is the S&P 500′s 200-day moving average. I think it’s likely that the first test of that level will come tomorrow:
The Nasdaq looks like it just made an island (cluster) bottom:
I’m changing the short-term trends on the Nasdaq and S&P to “up” since they closed above their 10-day moving averages. The Russell, which closed on its 10 DMA gets the dreaded ‘lateral’.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Down | LA | LA |
| Intermediate | Down | Down | Down |
| Short-term | Up(+) | Up(+) | LA(+) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
LA Indicates a Lateral trend
Especially the long white candle of yesterday, with a very big range, provides indications for higher rices at least in the short term. If it is an A-B-C correction what has been printed, prices will have to confront with 1260 (A) and 1290 (B) of the S&P before we can say that the uptrend is resumed. Otherwise a sideway phase is likely.