Bulls Back in Market on Hope that Brexit May Not Happen
A positive day on suggestions Brexit may not happen invited bulls back to market.
Action to this point had the look of a pullback swing low (at least as from Thursday’s action), so it was easy for buyers once it was clear there was a strong premarket. What was disappointing was the late sell off, which probably did more damage than Friday’s selling, but this can be rectified with a Tuesday close inside the upper part of today’s intraday range.
For the S&P(NYSEARCA:SPY), today’s action meant an inverse hammer crossover of the 20-day and 50-day MAs. It’s interesting to see stochastics [39,1] court the bullish midline in what would traditionally be a buying opportunity – so on the chance bulls are able to open the S&P above today’s close then today’s damage on the intermediate time frame (up to 3 weeks) may be slight.
For the Nasdaq(NYSEARCA:QQQ), today finished with a bearish black candlestick. It would be particularly damaging if tomorrow this was to be followed with a lower close, as holding on to Thursday’s swing low, or even the trading range lows of May, would look unlikely.
The Russell 2000 (NYSEARCA:IWM) did slightly better as it wasn’t sold off as hard as Large Caps. This is better news for bulls as money looks to stay with more speculative issues. Rate-of-Change for this index has also posted a new high as the index shifts to a more bullish stance.
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The Semiconductor Index had been my preferred index of choice today for bulls, but most of the gains were made pre-market with it closing with a bearish ‘black candlestick’. However, the index still looks well positioned for further gains.
For tomorrow, watch pre-market action closely. A gap down will set up for a full day of weakness, but if buyers can defend today’s close and hold on to the first 30-minutes of trading, then it may be able to catch shorts on the wrong side of the trade and fuel further buying.
Open action will be key…