Stock indexes closed mixed after being down sharply

q1024.pngStock indexes were down sharply early in the session, with the Dow being down nearly 200 points. Then suddenly, when focus apparently shifted to talk of the upcoming rate cut, the indexes erased most or all of the losses to close narrowly mixed. You can see the long tail on the QQQQ/Nasdaq 100 chart to the right, with the closing price near the opening price. This candle would have more significance if it hadn’t occurred in a congestion range. The line of three day pivots (yellow dots) has been going horizontal for some time now. The double stochastic in the lower sub-graph does show a divergence and the momentum in moving up, and the trend is still firmly up. Also, the low of the day tested the low of two days ago, therefore finding buying interest at the same point. Since the test of that low point held and attracted buying, it would be logical to assume a test of the highs will be successful, and if overcome, could create the buying interest to put in another impulse leg up. The congestion pattern of the last couple of weeks is forming a broadening pattern, which is potentially bearish. If a push to new highs is followed by another test of the lows, this broadening formation could result in a bearish reversal. That is only a possibility at this point, but something to keep an eye on.
s1024.pngThe S&P ETF to the left shows a somewhat more negative picture than the Nasdaq, which has been the case for some time. (The Dow looks almost identical.) On the positive side, the regression curve seems to generally be holding the price action, although chart support has been taken out. Also, the double stochastic in bottom graph shows an oversold reading. Prices finally closed back up above the three day pivot. The channel, drawn with the blue line, could be viewed as a bull-flag if compared to the entire previous up-leg, and ignore that four day downswing in the middle. Some technicians would view this pattern as too extended to be a proper bull-flag. However, from the August 16th low, the current down-swing has the correct proportion for a bull-flag, and the candle pattern shows possible exhaustion on the test down. As with the QQQQ, it looks like a test back up is possible.
The Gold up-trend is still intact. My gut feeling is that it has extended too far without a significant shake-out, but I see no technical evidence of a turn-around yet. With Gold that turn-around can arrive quickly, without warning.

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