The market’s still trying to stabilize and find direction after last Friday’s big selloff. The indecision was evident today as both the S&P 500 and Nasdaq had inside days.
An inside day is often used to signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day. If an inside day is found at the end of a prolonged downtrend and is located near a level of support, it can be used to signal a bullish shift in trend. Conversely, an inside day found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse.
As always with range contraction I’m expecting an increase in volatility. These narrow(er) bars/candles often give setups with nice tight stops. (buy above the candle with a stop below or vice versa)
The dollar has had an impressive two days and is likely helping to cool oil off a bit. It’s approaching resistance and could be setting up for a breakout.
|Trend||Nasdaq||S&P 500||Russell 2000|
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Post from: Trader Mike's Blog