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Mixed Day for Markets on Wednesday

A mixed day for markets.

 

By Dr. Declan Fallon

 

The only winner was the Semiconductor Index as it gapped higher off yesterday’s strong white candle. With other markets suffering losses the risk of a ‘bearish shooting star’ tomorrow is reasonably high.


The Nasdaq(NYSEARCA:QQQ)  ran contrary to the Semiconductor Index as it finished on a small bearish engulfing pattern. I would have looked for the Semiconductor Index to feed into the Nasdaq but this hasn’t happened; it’s hard to see the Semiconductor Index maintaining this form.

The S&P (NYSEARCA:SPY) had a similar day to the Nasdaq, finishing with a bearish engulfing pattern. As with the Nasdaq, volume rose in confirmed distribution. On the bright side, relative performance picked up against the Russell 2000(NYSEARCA:IWM); so whatever money is coming into the market will flow into Large Caps first.

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The Russell 2000 experienced a near 1% loss on another bearish engulfing pattern. Tomorrow will see the first test of support of converged 20-day and 50-day MAs; I have marked this as a possible shorting opportunity with a bearish divergence in the MACD and a sharp drop in relative performance.

For tomorrow, look to the Russell 2000 to add to today’s losses. At the same time, watch for a gap down (and bearish evening star) in the Semiconductor Index.