Today’s action didn’t break the bounds of Friday’s range but did create a scenario where solid swing lows develop; bullish harami crosses are one of the most effective swing low markers.

The best opportunity can be found in the Nasdaq 100. A rally from here would suggest the makings of a trading range which I have marked in the chart below. The typical stop is a loss of 6,320 but I would use a decisive break of the 200-day MA as a stop.

The Nasdaq also has a 200-day MA to work as support, with the bullish harami stop kicking in on a loss of 6,805. Stochastics are not oversold which is perhaps the only weak point for the harami cross swing low for both the Nasdaq and Nasdaq 100.

The S&P managed a stronger rally coming off its 200-day MA. It’s a good positive test even if volume is a little lacking. Stochastics are not oversold but relative performance is slowly gaining.

The Russell 2000 posted the biggest gain on the day and is benefitting from the strong relative performance. Risk is measured on a loss of 1,482 which is also below the 200-day MA. There is much work to do but successful rallies like to climb a wall of worry.

Today is a good start. Look for some bullish follow through tomorrow – preferably off the open. Today’s bullish harami-crosses are negated on a loss of Monday’s lows and leave bears back in control. 

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