Saturday, March 21, 2009

Weekly Stock Commentary: Rally runs into Resistance

A powerful week long rally has taken some indices up against resistance. In the case of the S&P the index finished at former November support. The higher volume ranks it as an accumulation week and the MACD 'buy' signal is another positive. Stochastics remained deep in oversold territory so the improved strength is no indication of an immediate reversal.


The Nasdaq had a more low key week with lighter volume and no test of resistance. The MACD is already net positive but like the S&P, stochastics are deeply oversold.


With the exception of the Percentage of S&P Stocks above the 50-day MA none of the breadth indicators made it to oversold conditions before bouncing. Not sure what this means for these indicators (and therefore the market as a whole) but it feels like this bounce has come a little too soon - not that this will worry bulls...


Is there a retest to come?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website
 
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