Monday, October 05, 2009

Stock Market Commentary: Limp Recovery for Tech

Large and Small caps got a welcome boost with a decent percentage recovery. But Tech disappointed, with low volume only compounding the disappointment. In the end considerable work was left for the indices to do to erase last Thursday's losses.

The Nasdaq is holding 50-day MA support but the sharper channel breakdown remains and relative strength has shifted back in favour of Large Caps; a bearish shift to safety.


Given the decent bounce in large caps the question now becomes what happens when they approach 20-day MAs? The Dow has made a picture perfect defense of the 50-day MA so how far can it take the bounce?


The Semiconductor index saw a neat negative turn in technicals even with today's gains


The Bullish Percents saw a bearish 'sell' trigger in the MACD - enough to redraw the 5-month negative divergence. There was also a bearish cross in the directional index with the bear trend gaining over the bull and in stochastics too. All supporting technicals are now bearish for this breadth indicator.


This has left the three breadth indicators I follow net bearish technically. So although today belonged to the bulls it was the bears which took the laurels.

Watch for resistance at 20-day MAs for Tuesday


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.

 
f9229fcfd1b1390be00cfccc86c90349c93a4179bf4227457c