Monday, April 26, 2010

Stock Market Commentary: Shooting Stars Small Caps & Semiconductors

The day closed on quiet trading with potential bearish topping patterns for the Russell 2000 and the Semiconductor index, but weakened by the lack of confirmation from Nasdaq or S&P indices (although the Dow did manage a similar shooting star). The semiconductor index had the clearest topping pattern but it will require a close below today's low to confirm and preferably an open below the low too. The rising trendline is there to lend support should the SOX push lower Tuesday.

($SOX)

via StockCharts.com

Small Caps also finished with a shooting star. After 4-days of gains it's probably set for a down day Tuesday; rising support may be tested then too.

($RUT)

via StockCharts.com

The Dow finished with a similar bearish set up. Unlike the aforementioned indices this has already fallen out of its February rising channel and looks already to be rolling over in a topping pattern.

($INDU)

via StockCharts.com

Breadth indicators continued their ascent and I have redrawn the bearish divergence in the Percentage of Nasdaq stocks above 50% although the original bearish divergence in the MACD remains. The indicator itself is whipsawing around its 5-day EMA with fewer stocks partaking in this rally than during the last market peak in January

Nasdaq Percent of Stocks Above 50 Day Moving Average

via StockCharts.com

So while the rally has support to look too I suspect Tuesday will see a lower close.

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