Wednesday, May 05, 2010

Daily Market Commentary: Indecision at 50-day MAs

Yesterday's selling - considering volume, relative loss, and 50-day MA support - should have provided a strong position for bulls to work a response. However, when markets opened bears were able to press in early trading to easily push markets away from 50-day MA comfort zones so when buyers materialized there was a reluctance to return markets back to their natural support.

The S&P is close to a net 'sell' on technicals as the index closed with an indecisive 'spinning top' below the 50-day MA. Relative strength has shifted to its most bearish alignment of Large Caps leading Small Caps leading Tech stocks.

($SPX)

via StockCharts.com

While the Dow was able to cling on to its 50-day MA

($INDU)

via StockCharts.com

As was the Russell 2000 (Small Caps) - even with its underperformance relative to Large Caps.

($RUT)

via StockCharts.com

Although the Nasdaq lost its 50-day MA

($COMPQ)

via StockCharts.com

While the semiconductor index closed net bearish as stochastics crossed the mid-line lower. The 50-day MA is a long way from helping so look to the 200-day MA in combination with rising triangle support to lend bulls a hand; prices converge around 342.

($SOX)

via StockCharts.com

With the disappointment of today it could be hard for bulls to find motivation for tomorrow. Another challenge on 50-day MAs looks likely, but will bulls be able to make those gains stick? Are 50-day MAs shifting from support to resistance?

Follow Me on Twitter

Build a Trading Strategy in Zignals; Read how and earn real money (once out of Beta) in this PDF.


Subscribe to one of 58 trading strategies covering US, UK, Canada, Forex, ETFs, Frankfurt, Australia or Irish Markets

Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies for global markets, also available through the latest rich internet application for finance, the Zignals MarketPortal or the Zignals Trading Strategy MarketPlace.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock list watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash.

Read what others are saying about Zignals on Investimonials.com.
JOIN US TODAY - IT'S FREE!

 
f9229fcfd1b1390be00cfccc86c90349c93a4179bf4227457c