Wednesday, February 09, 2011

Daily Market Commentary: Snooze Fest

Very little to report on today. Markets eased back after a series of straight gains had kept bullish momentum to the fore. Losses in the S&P came on technical heavier volume, but hardly enough to rank as distribution - nor enough to suggest sellers were in control. Technicals remain healthy.

($SPX)

via StockCharts.com

It was the same story for the Nasdaq. It's recent MACD 'buy' strengthening to the upside. The volume selling had a stronger hint of distribution than for the S&P, but not enough to be an outright worry.

($COMPQ)

via StockCharts.com

Where concerns lie is with the Percentage of Nasdaq Stocks above the 50-day MA. There is mounting pressure with fewer stocks supporting the rally. At the October peak, 70.6% of Nasdaq stocks traded above their 50-day MAs. Today this figure stands at 58.7%. During this time the Nasdaq has added close to 10%.

($NAA50R)

via StockCharts.com

Finally, the Russell 2000 is trading close to former channel support turned resistance. Technicals are healthy, but a natural supply level is fast approaching.

($RUT)

via StockCharts.com

With Market Breadth weakening it's only a matter of time before this is reflected in parent markets. For now, trade the trend and use channel support and/or 20-day MAs as areas to buy and/or place stops.

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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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