Friday, June 12, 2009

Stock Market Commentary: Dilly Dally

There was no confirmation from yesterday's bearish set of candlesticks but indices instead went on to add another a set of (bearish) shooting stars to the mix. Even when the inevitable downswing occurs the proximity of support derived during May will probably soften any blow. One area of interest which caught my attention was a 5-week bearish divergence in the CCI of the semiconductor index - but this has to be viewed in the context of a negated 2-month bearish divergence in the MACD trigger line. Battle lines at 270 and 285 are clear to see.


Another point of note is the substantial improvement in the long term bullish perspective with respect to the percentage of stocks trading above their 200-day MAs. The Nasdaq is showing 62% of its components trading above this key long term MA - well above resistance from the early part of the cyclical bear market. While one can argue intermediate market breadth points to a period of upcoming weakness, this weakness should be an excellent buying opportunity. A substantial bullish divergence would be created if a new low in the Nasdaq were compared to the corresponding reaction low of the Percentage of Stocks above their 200-day MA - a second drop below 5% in the aforementioned breadth indicator is unlikely to occur again any time soon.



Enter to win the Trader's Business Plan prize?

[1] Register at Zignals.
[2] Go to Charts and select a stock (you will be prompted to download Microsoft Silverlight)
[3] Click on the YourCall Icon


[4] Enter a Call by giving a stop and target price; make sure the Time Period is set to Short (month)
[5] Enter as many calls as you like up until the end of June; these can be long or short signals
[6] Send me your Zignals Userid so I can track the calls made (declan-at-zignals.com) or post it in the comments section of this post. In your email make reference to the competition.
[7] The Zignals member with the stock giving the highest return from either a target hit or expiration after 22 trading days will win the prize. Only stocks or FX prices listed on Zignals qualify for entry (no pink sheet stocks). The announcement of the prize winner will be made at the end of July.

Good luck!


Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

 
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