Thursday, November 19, 2009

Stock Market Commentary: Battle Lines Shift

It was day when Tech breakouts failed as Large Caps clung on. Relative strength shifted away from speculative small caps and tech to 'safer' large caps.

For the Nasdaq, the loss of the breakout shifted interest to the 20-day and/or 50-day MAs. Higher volume combined with heavier volume marked today as a firm distribution day.

The Nasdaq 100 probably did enough to hold its breakout - but the action in its sister Nasdaq suggests lower prices are to be expected.

The Russell 2000 took it hard with a 2%+ loss which cut through its 50-day MA and took it down to its 20-day MA. The 20-day MA held but for how long is another matter. Today's extensive selling for the index also points towards lower prices in the days ahead.

The market is on warning but the rally in tech and large caps is intact and well inside rising channel boundaries. The exception to this are small caps and the semiconductor index which are still looking for a new definition of trend, albeit with a bullish bias.

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