The reaction from last week specifically on Thursday and Friday created a potential false breakout scenario (or up thrust) in S&P 500, Russell 2000 and Dow Jones. The reaction was accompanied by increasing supply, which was bearish looking at the first look.
However, with volume spread analysis (VSA), we notice that Friday’s bar showed smaller spread with similar or slightly higher volume, suggested presence of the demand in S&P 500 and Dow Jones and NASDAQ. A rally is expected in order to confirm the presence of the demand. It is important to judge the character of the coming rally (if it happens) to seek more clues between the false breakout and the backup action.
So far the S&P 500, Dow Jones and Russell 2000 outperform NASDAQ since the change of behavior bar on 13 Jul 2020. This is inline with the possible rotation play as mentioned in my Week 29 market roundup.
- S&P 500 — Level at 3180–3190 is the first level of support to monitor.
- NASDAQ — Trading range between 10300–11050
- DOW — Anything above 25900 is still considered bullish.
- Russell 2000 — Watch out for support level at 1400. The bias is still bullish.
Check out last week market analysis video series below if you haven’t or would like to reflect how last week unfold together with your preparation and analysis:
Stock Watchlist — Malaysia
FGV -immediate target at 1.23 was hit immediately on last Monday, followed by vertical supply absorption to initiate a breakout with a close at 1.29. Next target at 1.38.
MASTER — Possible test of the swing high resistance near 2.08 after increasing demand last week.