Tuesday, May 11, 2010

Daily Market Commentary: Pinned by 50-day MA

Monday's bounce ran into the first of its struggles at 50-day MAs. Volume again dropped to yesterday which is a mixed bag given the indices themselves closed below their intraday highs.

The S&P had a picture perfect reversal off its 50-day MA. The doji implies indecision and suggests Wednesday may finish with lower prices, particularly if the S&P opens the day by gapping lower and below the lows of today.

($SPX)

via StockCharts.com

The Nasdaq was able to close a little above Monday's close but like the S&P was repelled by the 50-day MA.

($COMPQ)

via StockCharts.com

The Russell 2000 closed above its 50-day MA, but while this may give hope for bulls there is instead a declining 20-day MA to pressure longs. There was a CCI 'buy' signal to suggest there may yet be another couple of days worth of gains to be had.

($RUT)

via StockCharts.com

It looks like shorts are playing the percentages but if there is a drive above the 50-day MA there is a good chance the rally will gather momentum as new shorts are forced to cover their positions.

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