Thursday, July 29, 2010

Daily Market Commentary: Stall Day 2

It was a roller coaster of a day but in the end markets finished slightly lower. Early action saw challenges on resistance as marked by Monday's highs, but markets were unable to push their advantage.

The S&P finished with a 'spinning top' on heavier volume; volume was enough to generate a sell trigger in on-balance-volume. There is an upcoming 'golden cross' between 20-d and 50-d MAs which means the 20-day is going to be the support area on the pullback.



The Nasdaq touched bases of the 200-day and 50-day MAs. With the declining trendline (former channel resistance) to work with there is a chance we will see buyers make a stronger stand at the convergence of trendline, 20-day and 50-day MAs.



The Russell 2000 played to form and tested the converged 20-day and 200-day MAs. If the market closes lower tomorrow it would suggest converged MAs will not hold.



The Dow violated former trading range resistance to take it down to its 200-day MA, but in the end closed the day just a hair above - keeping the breakout intact.



Semiconductors played off all three moving averages; 20-day, 50-day, and 200-day MAs - finding support at the latter. The sideways trading range is still dominant but if buyers are going to play ball they will need to step up to the plate soon.



Tomorrow's interest will focus on Semicondutors, Russell 2000 and the Dow - buyers don't have much room to maneuver if they are to defend key moving averages in these indices. A weak close tomorrow - even one which held these moving averages - would be an omen for worse to come.

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