Beware The Spike High

Monday promised much - Tuesday provided an air of gloom.  The S&P (SPX) finished the day with a 'gravestone doji' which is usually a bearish reversal candlestick.  Adding to this is an overbought setup, which strengthens the reversal potential of the candlestick.  If this is to play out then look for a lower close tomorrow, which collectively would also setup a 'bearish evening star'.

The Nasdaq (QQQ) closed with a bearish 'black' candlestick (also 'bearish cloud cover'). Volume climbed - which would register as accumulation under normal circumstances - but with today's setup, I would see this as more bearish. Tomorrow should be a day for sellers. 

The Russell 2000 (IWM) is still range-bound which protects it from reversal machinations to a degree, but yesterday's breakout looked like the start of something. Today's selling has undermined much of this hard work.  Another down day tomorrow would create a 'bull trap' and open up for a larger move down. 

Tomorrow is an important day for the indices. Monday had offered an opportunity for bulls which Tuesday is doing its best to take away.  Another down day tomorrow will confirm today's bearish setups. 

Disclaimer: Riki nema disclaimer.

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