Stock markets saw panic buying on Monday, but now comes the hangover…
For those who have a long wait time, buying here is not a bad thing to do. Tik Tok traders looking to steal a profitable trade are unlikely to fare too well, as whipsaw becomes a real problem due to the sharp rise in .
The had a prolonged period of low volatility for most of the 2010s, but since the break of that period of (volatility) consolidation in 2018, it has steadily risen. Fortunately, markets have had a sustained period of gain despite COVID, but as the virus enters the final stage of its infectious cycle, the “selling of information” has started early, creating the volatility we are seeing. currently.
VXN Monthly Chart
On Tuesday, the tagged its 10% band from its 200-day MA, but it would need to be 14% below its 200-day MA to start suggesting it is close to a long buy. term. However, if you are an investor with a buy and hold philosophy, now is the time to buy – even if Monday’s low turns out to be a false dawn, it will be a swing low. Monday’s buying is considered an accumulation even though all other technical data is bearish.
COMPQ Daily Chart
Yesterday the day closed with a potential bullish Harami Cross. There is decent demand on the breakouts below 4,350, although the technicals remain clearly bearish.
The only technique that works in its favor is relative performance versus small caps. If the bullish Harami Cross plays true, we should see a gap opening and a higher close later today. Any close in the low peak will open for a move to 4,222.
SPX Daily Chart
The (via ) trades around its measured move target. Like the S&P, it also finished with a bullish Harami Cross and is well positioned to advance on Wednesday. A lower fence, however, would negate the pattern.
IWM daily chart
At first glance, Tuesday’s weak start has likely put many traders on edge, but the pattern paired with Monday is a bullish setup. That said, it has to deliver, and an open gap higher would be a typical start.
Bullish Harami crosses do not close lower, so if there is weakness in the opening half hour later in the day, some caution is advised.