Sunday, November 14, 2010

Weekly Market Commentary: Breakouts in Trouble

It was a troubling close for indices as Tech breakouts struggled and S&P breadth continued to weaken.

The S&P lost its push to new 2010 highs, leaving a bull trap, but has support at the triangle breakout to look too.

($SPX)

via StockCharts.com

The Nasdaq left behind a bull trap on the large bullish head-and-shoulder pattern. There is still a chance for a push back above 2,535 on what has the potential to be a significant long term (bullish) move.

Nasdaq

via StockCharts.com

The Nasdaq faces another struggle with the Percentage of Nasdaq Stocks Above 50-day MA also on a bull trap with respect to the declining resistance breakout. I suspect this bull trap will be harder to reverse and this breadth indicator will fall to a pivot low (sub-30%) before recovering. Therefore, the likelihood of the bull trap reversing in the Nasdaq is looking less likely.

($NAA50R)

via StockCharts.com

Add to this, a Summation Index at resistance and the short term picture for the Nasdaq is not good.

($NASI)

via StockCharts.com

Breadth for the S&P is also weakening. The Percentage of S&P stocks above the 50-day MA is on course to create confirmed 'sell' signal.

($SPXA50R)

via StockCharts.com

The weekly charts are shifting ever increasingly bearish, but in this time frame reversals can take months to play out. It's a stock picker's environment - not one where you can expect every stock to gain in the months ahead. Index-based trades are unlikely to reap big rewards in the months ahead.

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