Wednesday, June 09, 2010

Daily Market Commentary: Worrisome Reversal

In my earlier piece on the Zignals blog I had talked about the possibility of a rally with a suggested stop 0.5% below Tuesday's close. Well, the S&P finished 0.6% below yesterday's close after failing to hold on to early afternoon gains - busting that play before it had a chance to shine.

Based on today's finish it looks like the 1,040 level is going to crack, but there is enough in supporting technicals to suggest a bottom is not far off.

($SPX)

via StockCharts.com

It was a similar story for the Nasdaq with a bearish engulfing pattern on Tuesday's doji. Watch for a gap below 2,139 which is what bears are pushing for on today's weak close. As with the S&P, technicals are improving and are in the process of setting up bullish divergences.

($COMPQ)

via StockCharts.com

The Russell 2000 was repelled by the 200-day MA but at the same time didn't collapse to the same degree as the Nasdaq. It finished the day finely poised.

($RUT)

via StockCharts.com

The Nasdaq 100 had the worse of all worlds; repelled by the 200-day MA, bearish engulfing pattern and higher volume distribution - a trifecta of pain. Throw in a MACD trigger 'sell' and you have a whole lot of trouble. This is the index to watch for leads on Thursday.

($NDX)

via StockCharts.com

The semiconductor index was also thrown back into the mire after briefly recovering Feb-May support. But, here too are bullish divergences in technicals to look too.

($SOX)

via StockCharts.com

So for tomorrow the Nasdaq 100 and Semiconductor index will probably govern what happens in other indices. Bulls best chance looks to lie with the Russell 2000 - particularly if it gaps higher as short covering could take it back to its 200-day MA.

Follow Me on Twitter

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



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