Thursday, March 17, 2011

Daily Market Commentary: Extends Losses

There was no escape for bulls as the breakdown gap from the open held. As a result, bulls were unable to grab control of the market in the fist hour. When this buying exhausted control was ceded back to bears.

Selling in the S&P was able to dig fingernails in at yesterday's lows on heavier volume distribution. Based on my sectorbreadth analysis, the S&P has not reached a bottom (but it's close).

($SPX)

via StockCharts.com

The Nasdaq closed outside of its downward channel. Higher volume distribution was also in the picture; since the gap down there have been eight distribution days to one accumulation day.

($COMPQ)

via StockCharts.com

The Russell 2000 wasn't as hard hit as other indices. Wednesday's selling actually left it sitting on downward channel support and positioned for a bounce.

($RUT)

via StockCharts.com

The Dow Jones Index had been relatively immune to the selling. It had been the last to crack outside of its rising channel from last summer, but it's making up for it now.

($INDU)

via StockCharts.com

Days like today offer bulls little confidence. Any goodwill built up by yesterday's slog up the hill by buyers was quickly undone Wednesday. I doubt many will be willing to jump back in from the sidelines, and in the absence of buyers (not necessarily seller with participation) markets fall under their own weight. The Russell 2000 remains the best long side opportunity given it held support.



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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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