Stock indexes and oil higher

qqqq0415.pngStock indexes edged a bit higher today, even with crude oil blasting off to new all time highs and other inflation worries in the news. The chart of the Nasdaq/QQQQ to the left shows a tail left on the candle today. I put a cyan circle around the tail. This implies price rejection as prices were trying to approach some support. I drew the yellow line at the minor swing point about 13 bars back, which was also a minor resistance area a week or two back from that point. The trend is still up, but barely so. Short term momentum is still oversold and pointing down, but will likely turn back to the upside tomorrow. This pullback has been a little too deep in relation to the moving averages, but holding above the support line is encouraging to the bull (baby bull) case. And the tail on that candle should be view as bullish, that is if the market can put in some upside and get back above at least the lower moving average, thus leaving that tail there all by itself.
profile0415.pngOne problem I see is the volume distribution. Looking at a candlestick chart only takes into account the open, high, low, and close. It doesn’t show where activity was occurring. The distribution profile bell curve of the day session Nasdaq futures is shown to the right. I cut off the profile from three days back, as that was a wide range day and would have taken up too much space, but the profile from Monday, in the middle, shows value (the purple vertical line) being driven lower, and value today (the profile on the right) being driven down a bit further today, although with value overlapping. The yellow dashes are the close of the day session today. What I want to point out is that the tail left on the day candle was not so much a rejection area when viewed on the profile. If the tail had been a line of single prints (each letter represents a half hour time period during the day) then a case could have been made that the market explored the lower areas and quickly rejected those lower prices. The fact that the market accepted those lower prices by most of the trading activity occurring in that tail leaves the possibility that those prices may still be revisited. The last two days being relatively small range bars with balanced profiles indicates a large range day will occur soon. Perhaps some bullish earnings news could cause this market to push up through the tops of these two bars, which could lessen the possibility of further tests back down. But unless that happens I will be monitoring closely for any signs of rally failure and a push back down. The evening session as I write this is much higher and back above the lower moving average, and if that holds through Wednesday momentum will turn up, and that candlestick tail will look like a good signal. But the bottom line is to proceed cautiously as this potential bull (baby bull) is still very fragile and could easily break down.

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