Monday, April 19, 2010

Daily Market Commentary: Relief Bounce in Effect

Not surprising to see markets recover after Friday's heavy selling. The S&P low of 1183.68 was a picture perfect 20-day MA test but Friday's close ranked as a breakdown (from the perspective of candlestick real-bodies - but not full intraday ranges), so the bounce is working against resistance, not support as before. The MACD switched to a 'sell' but it has been whipsawing the past few weeks so it's not a strong signal.

($SPX)

via StockCharts.com


The Dow actually broke channel support on April 7th and marked a successful backtest on April 14th. Monday made substantial inroads to Friday but the rate of ascent from February lows has slowed. It too closed with a MACD trigger 'sell'.

($INDU)

via StockCharts.com


Tech averages clinged to channel support with the breakout gaps closed (true breakout gaps never close). But the recovery off the lows may see some follow through up over the coming days given the successful defense of support.

($COMPQ)

via StockCharts.com


The same was true of small caps, although the defense of support was marred by a CCI 'sell' trigger

($RUT)

via StockCharts.com


So look for today's gains to follow through tomorrow morning and perhaps for the next 2-3 days. But it's going to be much harder for new highs to be reclaimed given the extent of Friday's selling volume. Shorts will be feeling confident.

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