Thursday, October 28, 2010

Daily Market Commentary: Markets Drift Out of Rising Channels

Given I missed yesterday's market action the net sum of the past two days saw markets drift outside of their rising channels, but this action occurred without triggering a sell off. The S&P shows this clearly, although the break of the August-October channel is riding channel resistance (turned support) of the July-October rally and the 20-day MA.

($SPX)

via StockCharts.com

The drift was a little more subtle in the Nasdaq. Today's close looks like a bearish 'hanging man' for the rally. A gap down and lower close Friday will confirm.

($COMPQ)

via StockCharts.com

The Russell 2000 was not so subtle in its action, suffering a more traditional down day. There was also a 'sell' trigger in the ADX to add to ones for the CCI and MACD. However, it did defend the 20-day MA for a second day.

($RUT)

via StockCharts.com

However, semiconductors continue to pound the numbers. A big day yesterday glossed over lackluster action in lead markets.

($SOX)

via StockCharts.com

Semiconductors still have room to run to resistance. Bullishness in semiconductors could help the Nasdaq / Nasdaq 100 creep back inside their August-October channels. However, the tide looks to have turned in favour of bears for the S&P and Russell 2000.

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