Tuesday, February 22, 2011

Daily Market Commentary: No Shortage of Action

It was a busy day after what seemed to be an eternal period of small gains. No index escaped the selling, but the outlook for each is different going forward.

The S&P took a sizable 2% loss, bringing it down to its 20-day MA on heavier volume distribution. The selling was accompanied with a MACD and ADX 'sell'. However, the S&P is holding inside its channel and has yet to test trend support, so bulls keep control.

($SPX)

via StockCharts.com

The Nasdaq took a bigger hit, gapping and falling to channel support which undercut the 20-day MA. Volume climbed to register a distribution day also with a MACD and 'sell'. The Nasdaq is offering a support 'buy'

($COMPQ)

via StockCharts.com

But the buy opportunity in the Nasdaq is weakened by the higher volume channel break in the Nasdaq 100. It undercut its 20-day MA with a MACD and CCI 'sell'. It's still possible another bear trap will emerge, but it appears unlikely. Will shorts pile in tomorrow?

($NDX)

via StockCharts.com

Shorts will also be looking at the Russell 2000. The index broke channel support at the start of the year and has been riding former support turned resistance. Today's -2.6% loss left it just above its 20-day MA. There was no MACD 'sell' but there was a 'sell' in the CCI.

($RUT)

via StockCharts.com

Buyers do have one decent opportunity. The semiconductor index finished at converged horizontal and trendline support. 'Sell' triggers in the MACD and CCI might restrict buyers enthusiasm but the channel has played true to date.

($SOX)

via StockCharts.com

So bulls and bears will fight it out tomorrow. Shorts will look to the Russell 2000 and Nasdaq 100. While potential buyers have the Nasdaq and SOX to play with. Happy Hunting

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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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