The S&P is laying a challenge on last week’s ‘bull trap’ but has yet to fully close the gap. Until it does, the favored move is a push back to former trading range support at 5,775.
The Nasdaq is in a more bearish predicament having lost trend support, failed to break to new highs, then gapped lower. However, it managed to close above-converged 20-day and 50-day MAs, but if these fail (tomorrow?), then a move to 18,600 is favored. The index is accelerating in its underperformance relative to the S&P and Russell 2000, so momentum is building to the downside.
I have redrawn support and resistance for the Semiconductor Index. Technicals turned net negative as the large gap down remain unchallenged. Looking for a measured move to 4,400.
Today’s action suggests there will be some opening weakness. If this happens, watch action after the first hour when the direction of trading for the rest of the day is set. Bulls can favor the Russell 2000 – Bears the Nasdaq.More By This Author:Dow Industrial Average Surges As Semiconductors Plunge
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