Nasdaq, S&P 500: Dead Cat Bounce, or True Reversal? Key Levels to Watch for Clues

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Nasdaq, S&P 500: ***** Cat Bounce, or True Reversal? Key Levels to Watch for Clues

This week’s market action could be a rollercoaster ride for traders. The Nasdaq’s bearish “evening star” candlestick pattern hints at further declines, but a mid-week spike low could offer a reversal opportunity.

Meanwhile, the shows mixed signals with a potential zig-zag correction, and the faces resistance amid light volume buying, suggesting a “***** cat” bounce and new swing lows by week’s end.

Are these mere bear traps or signs of a deeper correction? We delve into the technical indicators to see what today’s session might have in the offing.

Looking at weekly charts, the had finished with a bearish “evening star” candlestick reversal pattern and this is typically followed by further selling.

However, while I would be looking for further weakness, we may see on Wednesday or Thursday a spike low that will deliver the aggressive reversal day traders like.data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

Yesterday’s action in the Nasdaq could play as a “bear trap”, if the index can stay above 17,900 for the next couple of days.

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The () was able to mount a bullish reversal, although I suspect we will see some form of zig-zag reversal as we enter the “zig” phase of the correction. Technicals are net bullish, although stochastics are weakening and yesterday’s buying volume was light.

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The played the bounce-off breakout support, although the best of the action was available pre-market.

Yesterday’s finish tagged trendline resistance following Friday’s breakdown; if bears are in control then look for an open near yesterday’s close and then selling or flat action going forward.data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

The “***** cat” bounce is in play with light volume buying to start the week. I would be looking for new swing lows by the end of the week and be surprised if Thursday’s lows turned out to be the actual lows for the indexes.

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#Nasdaq #***** #Cat #Bounce #True #Reversal #Key #Levels #Watch #Clues

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