Sunday, October 17, 2010

Weekly Market Commentary: Pulling Away From Summer Consolidations

It was a good week for indices with across the board gains. Markets remain on course to test long standing resistance levels.

The S&P pushed higher on heavy volume accumulation. The 1,222 level is looking an attractive upside target for this advance.

($SPX)

via StockCharts.com

The Nasdaq lacked the volume but added nearly 3% on the week.

Nasdaq

via StockCharts.com

The Nasdaq 100 went one better; adding 3.5% and breaking through resistance. This index is closest to regaining back all of the banking-housing crisis losses.

($NDX)

via StockCharts.com

The only disappointment on the week was the rather tepid gain in the Russell 2000. It is still some way from challenging 2010 highs, let alone highs of 2007.

($RUT)

via StockCharts.com

On the warning sign front, the Percentage of S&P Stocks above the 50-day MA touched 93% - the highest it had managed in the past before it reversed. In terms of likely market response; the 2009 '93' changed very little and the S&P continued its advance; the 2010 '93' kick started the decline markets have struggled to reverse. Some reaction can be expected but it may not be a deal breaker.

($SPXA50R)

via StockCharts.com

Other breadth indicators continue to point towards further gains in parent indices (Nasdaq and S&P). Until these signal otherwise stay on the right side of the trend.

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