Thursday, September 30, 2010

Daily Market Commentary: Fails Follow Through

Thursday opened with the market unwinding higher, but it wasn't long before the gains were clawed back - and then some. It was commendable bulls didn't run and hide, although it's going to be harder for them to push higher given the morning's events. With bears spoiling, now could be the time we start seeing tests of 20-day MAs.

The S&P is holding above the rising channel line (former resistance). But there was an on-balance-volume 'sell' as technicals started to weaken.

($SPX)

via StockCharts.com

The Nasdaq closed with a bearish engulfing pattern, which is not hard to understand given yesterday's narrow range day. Strengthening the bearish factor is overbought stochastics. Look for a lower close Friday.

($COMPQ)

via StockCharts.com

The Russell 2000 closed just above trading range support. It's not as bearish as other indices but will likely suffer if others do.

($RUT)

via StockCharts.com

The Dow completed a picture perfect touch of rising channel resistance. Lower prices are the natural route from here.

($INDU)

via StockCharts.com

Friday is likely to be a tough day. Bulls will be looking for damage limitation and perhaps a test of 20-day MAs; a strong finish would set things up nicely for Monday. If bears can attack the morning session with gusto it's going to be hard for bulls to recover, particularly if indices fall back into prior trading ranges.

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