Monday, July 12, 2010

Daily Market Commentary: Bulls Do The Bare Minimum

Bulls did what they had to do to register a higher close, but did little to challenge the prevailing down trend.

The S&P saw a close over its 20-day MA with Friday producing a MACD trigger 'buy', with on-balance-volume and intermediate-term stochastics close to 'buy' triggers too. The tight "coiling" action of the past couple of days will unwind soon. Should the unwind push prices higher there is a good chance the downward price channel from April will break as part of the unwind.

($SPX)

via StockCharts.com

The Nasdaq closed below its 20-day MA but had a MACD and on-balance-volume 'buy' trigger. Volume rose to register a modest accumulation day - but really, overall volume remained light.

($COMPQ)

via StockCharts.com

Small Caps created a 'bear trap' with Friday's higher close but remains troubled by 20-day (and likely 200-day) MAs overhead. However, Monday's losses weren't enough to question the validity of the 'bear trap'.

($RUT)

via StockCharts.com

Again, semiconductors offer the best support for the Nasdaq and Nasdaq 100 with its close above the 50-day MA leaving it above the three key moving averages: 20-day, 50-day and 200-day MAs. Intermediate term stochastics and the MACD followed the CCI with 'buy' triggers. Should be enough to see a test of 377.

($SOX)

via StockCharts.com

The market is poised for a big 1-2 day swing, but it's not immediately clear which way recent tension will break. The proximity to resistance offers bulls a powerful incentive to break the trend but form suggests the move will be down. It's easy enough to place stops if going short, long-side is a little trickier because of the risk of whipsaw.

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