Thursday, February 14, 2008

Wednesday Market Review

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User id: Member email. Password: gold The 20-day MAs became the first scalp for bulls. Volume did measure as a (modest) accumulation day, negating Tuesday's distribution day. Last week's gaps for the NASDAQ and NASDAQ 100 are the next challenge on the menu for tech indices.

The leading Russell 2000, which was able to nudge a break of its 20-day MA yesterday, now has the 50-day MA only some 10 points away. Again, if the Russell 2000 breaks its 50-day MA I would expect the other averages to follow suit.

Large caps [Dow and S&P] have a little further to run before they get to their 50-day MAs, with the tech averages (NASDAQ and NASDAQ 100) the furthest away. However, the semiconductor index may help the latter indices as it closed 6% off its 50-day MA. The other area running in tech's favor is the relative leadership of semiconductors over the NASDAQ 100 - a leading indicator of strength. This positive relationship has been running since mid-January. Wednesday wasn't volatile, but the day swung back towards the bulls a little.

As I have noted on my blog, the bullish divergences in the Nasdaq market internals [$NASI, $NAA50R and $BPCOMPQ] are pronounced and together are unlikely to be a false signal. Based on such divergences I would expect challenges of the 50-day MAs for the NASDAQ and other indices.

 
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