Thursday, March 17, 2011

Daily Market Commentary: 'Death Crosses'

There are two sides to the coin. On the bullish front is the "bullish harami" (S&P and Dow) or "bullish harami cross" (Semiconductor index). On the bearish front is a 'Death Cross' between 20-day and 50-day MAs for the Semiconductor index, Nasdaq and Nasdaq 100.

The semiconductor index experienced both sides of the coin. The 'bullish harami cross' is one of the most bullish reversal patterns. It is helped by oversold stochastics and a MACD historgram on the rise. Stop goes on a break of 408.69 (closed at 417.97). The upside target is the fast falling 20-day MA, currently at 445.35.

($SOX)

via StockCharts.com

The Nasdaq opened at former channel support but couldn't push higher - lending weight towards an acceleration to the downside.

($COMPQ)

via StockCharts.com

The S&P played more to the 'bullish harami'. It was able to dig in at 1,260 support, but has its work cut out to break back inside the former channel or the fast declining 20-day MA. Minimal buying volume means weak demand.

($SPX)

via StockCharts.com

Meanwhile the Russell 2000 is conforming to its channel, despite today's losses. Still looks the index best positioned for a bounce.

($RUT)

via StockCharts.com

While the harami reversals offer opportunity there is considerable supply overhead. The 'Death Crosses' offer more long term resistance - but a bounce to declining 20-day MAs is not outside the realms of reason. Small Caps offer the best opportunity in this regard.

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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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