S&P 500, Nasdaq Eye Bounce Off Critical Support; Dow Faces Bull Trap

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S&P 500, Nasdaq Eye Bounce Off Critical Support; Dow Faces Bull Trap

So much for the bullish

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as bears made their presence felt. The biggest loss was in the as it lost nearly 8% to close just above the 200-day MA.

In addition, the latter index dropped below the stochastic mid-line, having struggled to return above the key divide between bullish and bearish markets.

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The selling pressure in the Semiconductor Index was enough to deliver a “bull trap” in the .

The index was well placed to advance, but it looks like it will take a little longer to deliver. Technicals are net positive and it will take more than one day of selling to change that.data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

In the case of the , yesterday’s loss dropped the index away from 50-day MA support and undercut its 20-day MA in the process.

I have redrawn a broader, downward channel for the index, but I would look to the 200-day MA as the first port of call for a support test. Of technicals, the +DI/-DI trend indicator has switched bearish.data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

The hadn’t cleared the July high – trading in a narrow range – but this changed yesterday with a clear undercut of this range, and a close at converged 20-day and 50-day MAs support.

It would be a good time for a bounce, particularly if there is a bullish candlestick like a dragonfly doji or bullish hammer at these moving averages. Technicals are net bullish.data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

The () experienced a bit of a repeat of the breakdown from July. The key will be what happens at $207.50 support. A loss of the latter would open for a last stand at the 200-day MA. Technicals are net bullish and have room to go (down) before turning bearish.

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It was disappointing to see the reversal, particularly in the Dow after its breakout. Markets had set up for a new phase higher, but it looks like things will turn more neutral as we head into the traditional bearish ******* for the market. Markets may have to wait until the traditional Santa rally before they take off.

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#Nasdaq #Eye #Bounce #Critical #Support #Dow #Faces #Bull #Trap

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