Saturday, January 30, 2010

Weekly Market Commentary: Heavy Selling

Selling volume picked up as bull trendline breaks were confirmed. With the second week of losses under the belt it's now time to look at Fibonacci retracements as potential support levels. In the Nasdaq this means the first support level kicks in at 1,932 with the low end at 1,683. Based on the March-Jan rally, most likely support is at 1,759.


For the S&P, fib retracements start at 966 and run down to 852 with a thick support zone in the 900-950 range.


The Russell 2000 lost its resistance breakout, leaving behind a sizable bull trap.


Touch points of the bearish divergence of Percentage of Nasdaq stocks above the 50-day MA proved to be good profit taking areas for those who took advantage.


The Percentage of S&P Stocks above the 50-day MA is getting to the point where soon it will be oversold and ready to buy - but not yet...


However, given all the bearishness - none of the indices have triggered 'strong sell' signals. Stochastics are fast weakening so if it's not next week it will likely be the week afterwards when these signals emerge.


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