MAJOR INDICES: CANDLES SPEAK: 04.03.2021

Tomorrow is Friday, the day of the weekly prints for the candlesticks, and I would like to share some musings based on observations of the daily and weekly candles.

Daily

  1. First of all, I am seeing a greater than usual bearish pressure if compared to all corrections after April 2020. The combinations of candles are different. They are mostly red and rather less overlapping.
  2. I marked the rather clean Three Black Crows combos in SP500 and Russell. This combination is one of the strongest bearish continuation combos, hinting about a further decline.
  3. Nasdaq is my biggest concern at this point. Both cash and futures have completed the Head & Shoulders classical pattern. Today the pattern has been confirmed by a strong price decline on a higher volume. Based on the pattern, I am viewing 11550 or 17% off the top as a minimal target for Nasdaq.
  4. From the perspective of technical indicators, the daily RSI is declining along with the price, strengthening the trend. On an important note, the daily RSI for all indices and futures are below 50.
  5. This week all daily PSAR flipped to the bearish side.

Weekly

  1. The most concerning is the developing weekly Three Black Crows in Nasdaq, and note the reinforcing gap between the first and second candles. I tried to find a somewhat similar pattern and I had to go back to September 2018 or August 2008 to find the closest. If tomorrow closes about today’s level or makes a new low, I would be expecting a multi-week bearish continuation.
  2. This week all the weekly PSAR flipped to the dark side.
  3. From the perspective of RSI, all indices show decline. It is also worth noting a rather outstanding Head & Shoulders in Russell’s weekly RSI.

Summary

Everything looks very bearish for now. Tomorrow would be a really critical day:
– The bulls would have a chance to make a nice reversal if we see a green day of 1.5-2%.
– If the day is red with the new lows, I would buckle up for a multi-week bearish market.

Let’s wait and see for the next 24 hours.

%d bloggers like this: