Tuesday, April 15, 2014

Daily Market Commentary: 'Bear Trap' in S&P

Today's action was much better news for bulls after a wide reversal swing. The S&P managed to inch a 'bear trap', although it will be vulnerable to mild selling tomorrow. On-Balance-Volume ticked to a 'buy' signal, volume climbed in accumulation, but the index finished just shy of its 50-day MA. The upside target is 1,897, risk measured on a loss of 1,814.

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Monday, April 14, 2014

Daily Market Commentary: Russell 2000 Finds Support at 200-day MA

It was a wide range day, but bulls were able to regain some of the mid-afternoon weakness by the close. Intraday weakness for the Russell 2000 found support at the 200-day MA, although the finishing close did not necessarily end bullish.

The Russell 2000 also lost relative ground against the Nasdaq after a sustained period of outperformance. It's an opportunity for bulls, although not as bullish as I would like to see.

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Sunday, April 13, 2014

Weekly Market Commentary: Selling Continues as Volume Eases

Thursday's sell off got some continuation on Friday, but volume dropped as the number of bailing sellers dropped. All indices now sit inside No-Man's Land of between 50-day and 200-day MAs - where it becomes harder for either side to gain an advantage.  The Russell 2000 will be the first index to test veracity of demand at the 200-day MA as it sits just a few points above this important support level.

For the Russell 2000, a push below the 200-day MA would quickly set up for a test of the February swing low. My expectation is for a trading-range style bounce from the February swing low, with the 200-day MA only to provide a brief respite from the selling. Technicals are oversold, which will help bulls, and the Russell 2000 is attempting a stronger recovery relative to the Nasdaq (but not yet to the S&P), which suggests money is prepared to come in at these levels.

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Friday, April 11, 2014

Daly Market Commentary: S&P Breakdown

In relative terms, the S&P has been well ahead of the Russell 2000 and Nasdaq for bullishness, but yesterday was an important victory for bears. The break above the 20-day MA from Wednesday failed to hold, and the resulting move lower was enough to undercut converged ranged support and 50-day MA. To add to the troubles, volume climbed in confirmed distribution.  Finally, supporting technicals all turned net bearish.  If there is a ray of light for bulls, it's that a 2% loss is likely to be followed by some value buying; value buying which may yet lead to a 'bear trap'.

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Wednesday, April 09, 2014

Daily Market Commentary: Sizable Rally But No Volume

Wednesday's finish offered bulls their day trade opportunity, but the volume wasn't really there to suggest something more than a bear rally.   However, the overall trend remains on the side of the bulls - so bears will need to remain cautious despite the past week's action.

However, the S&P did close well above the 20-day MA, in what could have been an attack point for shorts. Resistance at 1,880 is next with the 'bull trap' at 1,898 after that. Technicals are mixed, but stochastics suggest bulls still have control.

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Tuesday, April 08, 2014

Daily Market Commentary: Buyers Return At Support

The S&P played to form with buyers coming in at converged support and 50-day MA. There was even a morning sell off and recovery for those nimble enough to take advantage. The intraday picture is nicely set up for an upside breakout.  Short term (long) traders might want to take partial profits at 20-day MA, but a larger push to sideways resistance around 1,880 is not out of the question. Risk measured on a close below today's lows.

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Monday, April 07, 2014

Daily Market Commentary: Selling Overshoot

Buyers offered very little on the day, which was somewhat unexpected given large sell offs in recent months have found it hard to gain traction. What happens during the next rally is of greater importance to bears than the extent of this decline - bears need a lower high to suggest there is something more than just a trade of a couple of days.

The S&P traded down at March lows, part of a tight consolidation within a broader February-April trading range. Bulls may sniff an opportunity in this index tomorrow, as the March lows also converge perfectly with the 50-day MA. If there is a doubt it's that stochastics are not oversold, which may make any bounce short lived.

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