Friday, August 27, 2010

Daily Market Commentary: Pressures on Semiconductors

Thanks to Newark Air Traffic Control it has taken 3 days to return from the US, so here is a belated market review for Thursday. While overall market action has kept with range-bound trading, semiconductors have succumbed to selling pressure, breaking the July anchor support (which is support for the Nasdaq and Nasdaq 100) as the Russell 2000 (Small Caps) also feels the heat.

($SOX)

via StockCharts.com

The Russell 2000 is tentatively hanging on to July low support. Note the 'Death Cross' between 20-d x 50-d MAs; look for the 20-day MA to act as resistance on the next rally.

($RUT)

via StockCharts.com

Large Caps have a tentative upward channel which may be defended; first up is the Dow. Although technicals are net negative prior to the rising channel support test.

($INDU)

via StockCharts.com

The S&P is looking a little more buoyant

($SPX)

via StockCharts.com

Bulls will need the semiconductors to muster some form of bear trap over the coming days if the selling pressure is not to spread to the Nasdaq/Nasdaq 100. Bears are in control (50-day MAs below 200-day MAs in lead indices, net bearish technicals) but concerted shorting is not likely to occur until the next test of the 20-day MAs or at least until there is a test of the mini-reaction highs of mid-August. Watch for false rallies.

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