Monday, May 10, 2010

Daily Market Commentary: False Dawn?

Earlier during the day I gave my two cents on the events of last week and what to look forward too over the next ten days on the Zignals blog. In light of this, what had Monday's close to offer?

The Nasdaq is the index to study first given Monday's opening gap showed where all the bullish strength was focused. There was little follow through with the day closing on a relatively narrow range day (compared to the selling which has gone before). The 50-day MA is the nearest point of resistance and is still some 35 points away from the day's close. Upside volume was well down on prior selling - another bearish sign.

($COMPQ)

via StockCharts.com

The lack of the gap for the S&P offers a more misleading picture of the days' events - other than the low buying volume. Again, the 50-day MA at 1,171.6 is the resistance area where shorts are likely to get aggressive.

($SPX)

via StockCharts.com

The Russell 2000 rallied nearly 6% but it finished just 4 points shy of its 50-day MA.

($RUT)

via StockCharts.com

The semiconductor index made a good fist of it, closing at its highs which will help the Nasdaq and Nasdaq 100.

($SOX)

via StockCharts.com

Supporting technicals of the indices remained bearish, yet many have room to run to oversold conditions - having failed to do so on Friday. I suspect the next couple of weeks will see markets hit these lows. Watch for coiling action with a series of inside days which will eventually produce the spring move down. This move - should it come - will push markets into oversold conditions and provide a buying opportunity.

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