Monday, March 01, 2010

Stock Market Commentary: Clean Breakouts

It was a clean gap breakout for many of the key indices - a day which will have caught many shorts who entered at 50-day MAs with their pants down. Volume climbed to register an accumulation day, leaving room to resistance and both 50-day and 20-day MAs to look too as support. The Nasdaq demonstrated the breakout clearly

As did the Nasdaq 100

The Russell 2000 continued its leadership role with a scintillating 2.25% gain. If small caps are able to add another a percentage point it will mean new highs and a resumption of the bull trend - this should pull the other indices higher. Prior technical weakness also reversed.

The strength in small caps ran in contrast to large caps which limped over their 50-day MA. Weakness in large caps is not necessarily bad as it reflects a shift from safety to more speculative issues, but it will be important for large caps to follow small caps higher.

Tomorrow will probably see some consolidation and key will be ensuring 50-day MAs hold as support as the week wears on.

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