Thursday, January 28, 2010

Stock Market Commentary: Bulls Have Rug Pulled.

They held on for a few days but it was worrying bulls were unable to mount a challenge to the 50-day MAs, let alone the 20-day MAs. Volume climbed to register a confirmed distribution day. The possibility now is for some form of measured move down; for example, the Nasdaq could drop to 2,100 before bouncing.


Relative strength has shifted sharply to large caps and away from speculative tech / small cap indices. As an example, small caps had a bearish engulfing pattern on yesterday's bullish engulfing, although impressive, momentum is oversold so the pattern's significance is less. However, the losses on the day were enough to turn supporting technicals net bearish.


The Nasdaq 100 broke from channel support


As semiconductors took it on the chin.


But even in a 'leadership' role, large caps have their own troubles; note break of channel support in the S&P


Just to add insult to injury, technicals for the Percentage of Nasdaq Stocks above the 50-day MA, Nasdaq Summation Index and Nasdaq Bullish Percents are all bearish.




While markets remain oversold its harder to see markets making new highs from here. Shorts will be looking at the 50-day MA rather than the 20-day MA as an opportunity to enter the market.



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