The Gilmo Report

June 18, 2017

June 18, 2017

Coming in Thursday morning, holding cash or short positions was the place to be as the indexes gapped down sharply at the open. Based on the gap-down open, the indexes looked set to split wide open. But in its typical Ugly Duckling style, the market belied expectations and turned off the lows for a less than disastrous outcome by the close.

The NASDAQ Composite Index found support at a point just above its 50-day line on Thursday, and held in a tight range on Friday as volume ballooned on what was a quadruple-witching options expiration day. Is this a bear flag, or a small double-bottom type of formation that also has the “L” look of a possible “LUie” set-up?

Given that Thursday’s retest of the prior week’s low came on light volume, I would say there is a good chance that we could see a rally from current levels. That remains to be seen, however, and any such rally could just move back up to the 10-day line where it might run into resistance again, as it did on Wednesday.

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