Several Indices do Small Bearish Engulfing Today

Today several indices did a small bearish engulfing candlestick formation today.  The nasdaq composite and the SPY did, but other indices including the sp500 did not. 

This small bearish engulfing needs to be confirmed tomorrow with a close under today’s low for example on the SPY to show it is a real signal.  It does not look very convincing and we may simply be at a pause in the current mini up trend.

The most potent bearish engulfing formations I have seen in the past are the ones where the bearish engulfing candle easily closes lower than the previous day by a good margin.  This does not appear to be the case today.  It may be a head fake.

So at the end of the day the sp500 is still trading within this described ‘neutral zone’ waiting to make its next move.  It is also still trading above the mini bear down trend resistance line.


I do not see any reason to be ultra bearish right here.  If we get a hard down tomorrow that confirms today’s bearish engulfing candle and pushes us back under the mini bear trendline then perhaps it is time to re evaluate.

The RSI of the summation index is perched right under the 30 percentile line and if it manages to bust above 30 would be consistent with higher prices.  It is not exactly in a clear bullish configuration but there is some potential. 

As long as the sp500 either drifts sideways tomorrow or only very slightly down, there is still come bullish potential in the market in my opinion…

Posted in Index Trading, SP500
5 comments on “Several Indices do Small Bearish Engulfing Today
  1. traderjoe says:

    “The nasdaq composite and the SPY did, but other indices including the sp500 did not. ”

    Doesn’t the spy follow the sp500? that sentence didnt make sense ?

  2. ed says:

    Looks like were in for the pause that refreshes for the next several days, then we resume the uptrend

  3. Tom Tom says:

    I was just referring to the fact that the same candle formations were not present on all indices. Yes the SPY does follow the sp500 but sometimes the ending candlestick formations of the ETFS versus the actual index (sp500) do not look exactly the same. Same thing occurs in the DIA versis DJIA index… so usually I tend to believe the actual index itself since it is the most difficult to push around or manipulate.

  4. Tom Tom says:

    It would seem so Ed, I am not seeing much downside follow through with the bear short attack… instead maybe this is still short covering… and the action feels like end of quarter window dressing.. maybe they will blast us higher on the last day of March

  5. ed says:

    April is the strongest month for the $DJIA index since the 1950’s

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