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When support is taken out, often a rally takes place to test the old support as resistance. The NDX 100, looks to have done this of late at (1)! If a market is to reflect weakness, this is the situation where it can gain some downside momentum. Listen to the price action of Tech and Small caps? I am!
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Game Plan….Am attempting to score on defense due to the above chart, which was a quiz about 10 days ago (see post here). This chart is the Russell 2000, inverted. Some suggest to “Buy low and Sell high”…. If you believe in buying low, this situation was suggesting to pick up RWM with a stop on a downside break.
Side note….With “Memorial Day” coming up, more often than not, this week usually does not reflect a ton of weakness! So even though support may have broken, this seasonal pattern could support markets.
I notice NDX, Russel, S&P, and emerging markets forming short term falling wedges…since these are 2/3rds time break higher don’t you think we will see a test of longer term support breaks before a next leg lower in markets?