Wednesday, March 02, 2011

Daily Market Commentary: 50-day MAs Defended Yet Again

Yesterday's selling on volume had all the makings for a bearish follow through. However, bulls were again able to step in and hold support.

For the S&P this support came at the channel. Volume was lighter but the narrow range makes it easier to place a swing trade; trade break of high/low and place stop on the flip side of today's range.

($SPX)

via StockCharts.com

The Nasdaq was more vulnerable given it had dropped outside of its channel for a second time with a powerful breakdown gap. Despite holding its 50-day MA just a few days ago, it was again left to bulls to defend the moving average in the space of a few days. Buying volume was light - another reason to be suspicious. A push to 2,670 remains favoured but while the 50-day MA holds it is a moving average 'buy'.

($COMPQ)

via StockCharts.com

The Russell 2000 is evolving into a more gentle ascent, but it did well to defend its 20-day MA. The bearish divergence in the MACD is more of a concern.

($RUT)

via StockCharts.com

So today belonged to the bulls, but it felt more like a stall in the decline rather than a last stand. The narrow intraday range gives swing traders something to play with - as do 50-day MAs and channel support. Should these break it will give the impetus back to bears.


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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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