S&P 500, Dow Look to Push Higher and Nasdaq, Russell 2000 Could Follow Suit

  • Stock Market Analysis

It was a bit of an off day. The gap down had all the makings of a substantial sell-off (one I tried to short), but in the end, it was longs who came out on top.

The question for today is if yesterday's action can deliver a challenge on the day before yesterday's highs, and get past them on a way to challenge all-time highs.

The S&P 500 is the best of the indexes. The day finished flat, but yesterday's action remained close to yesterday's doji. It's the index most likely to follow through today.SPX-Daily Chart

On the subject of Large Cap indexes, the Dow Jones Industrial Average actually pushed beyond yesterday's candlestick, although it's up against another resistance level.INDU-Daily Chart

The Nasdaq is next in line, although we could be looking at a bearish 'evening star' despite yesterday's gain. Yesterday's gain wasn't enough to prevent a new 'sell' trigger in On-Balance-Volume.Nasdaq Composite-Daily Chart

While the Russell 2000 ( IWM ) has the most well-defined bearish 'evening star', although the pattern typically requires a standard red candlestick as the third candlestick for the pattern (not the one delivered).

It was interesting to see volume drop across the pattern, typical for a "bear flag", so I would not be surprised to see yesterday's gains reversed. Technicals are net positive, so there is work to do if this is a bearish scenario.
IWM-Daily Chart

Heading into today, watch the Dow Industrial and S&P 500 indexes for leads. If bullish momentum is maintained and the aforementioned indexes post gains, then I would expect the Russell 2000 to push higher.

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