Wednesday, July 07, 2010

Daily Market Commentary: Bulls Have A Lash

Day Traders will have enjoyed today and there may be something for those who are looking to hold a little longer. Although it was one-way traffic throughout the day it's only one step of part of larger climb, a climb with many tricky sections to overcome.

The semiconductor index and the Russell 2000 were noted as the indices to watch for bulls and bears respectively and it was the bull-watch semiconductor index which came up trumps with a 5% gain (against the 3.7% for the Russell 2000). The gain was also enough to regain the 200-day MA. However, 20-day and 50-day MAs are close enough to add supply and may stall the advance tomorrow.

($SOX)

via StockCharts.com

The spillover from the semiconductor index was enough to leave a bear trap in the Nasdaq 100 and set up a rally to new channel resistance. Unlike the semiconductor index there is a price void up to the next supply level at converging 20-day, 50-day and 200-day MAs.

($NDX)

via StockCharts.com

The S&P also produced a bear trap on the rebound. But the rally kicked off before a test of channel support - a move to channel resistance is next with the 20-day MA to add some supply interest.

($SPX)

via StockCharts.com

But bulls still have concerns; the Nasdaq closed on breakdown resistance and the Russell 2000 failed to reverse its breakdown.

($RUT)

via StockCharts.com

The issue with today is large 1-day counter-trend moves rarely stick and a push back to the lows can't be excluded - but it does give bulls something to work with. Semiconductors remain the best option for bulls although knife catchers will likely get greedy with the Russell 2000.

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