Thursday, February 24, 2011

Daily Market Commentary: 50-day MAs Defended

It was a bit of a mixed bag today. The S&P didn't drop far enough to test its 50-day MA, but it was able to defend channel support. It is still a reasonable low risk long play here, although it could still bear trap below support (i.e. close below support then close above support soon after)

($SPX)

via StockCharts.com

The Nasdaq offered the flip side scenario to the S&P. Bulls defended the Nasdaq 50-day MA, but did so from outside channel. A bullish set up requires a bear trap, which means former channel support has to be regained, something of a tall order. The 20-day MA overhead might play a roll in the recovery too.

($COMPQ)

via StockCharts.com

The Russell 2000 was another index to defend its 50-day MA, but it's not near any natural resistance level to challenge (maybe 20-day MA), so there is room for immediate upside.

($RUT)

via StockCharts.com

The best index to offer bear trap potential is the semiconductor index. Today's action closed near the highs of yesterday and finished just below channel support (current resistance). Relatively minor gains may be enough to confirm the bear trap. Friday will be interesting.

($SOX)

via StockCharts.com

So while today didn't offer too much for bulls, there is a chance for upside tomorrow.






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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Zignals Trading Strategy Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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