Between's Apple's (NASDAQ:AAPL) disappointing sale guidance, HSBC's (NYSE:HSBC) 35,000 employee layoff plan, and lingering Coronavirus, it was looking yesterday like markets were heading towards a clear downward session—but this was not the case. Instead, there was a large degree of indecision as existing holders were reluctant to sell but few buyers were willing to step in to defend these elevated prices.
On a pure technical view, markets look well positioned for further gains, the Russell 2000 in particular, but the Coronavirus hasn't yet revealed its full impact on economic supply chains or consumer confidence. The key trigger (for me) continues to be the Russell 2000 (via iShares Russell 2000 ETF (NYSE:IWM)). The channel breakout remains valid, even if the index hasn't yet blown past 52-week highs.
Technicals are good, although On-Balance-Volume is on the verge of a 'sell' trigger. Relative market performance remains very poor and is a long way from a new 'buy' trigger.
The S&P 500 recorded a small loss from well within its rising channel. Volume climbed in registered distribution, but given the doji candlestick I wouldn't view this as any concerted selling. Yesterday would register as a bit of a non-event for the index.
The NASDAQ is running along its upper channel. While this is often followed by an acceleration in the rally, a similar picture in the early part of January brought about a sharp—but brief— move lower. However, technicals remain very strong with no bearish divergences or concerns to worry about; a classic "hold" call.
The Semiconductor Index is so far playing to a double top, but no double top can be confirmed until 1,782 is breached, and this is a long way away.
For Wednesday, we will want to see the S&P hold its breakout and the {{0|Russell 2000|| (IWM) push through 170.