Monday, March 14, 2011

Daily Market Commentary: Indices Net Bearish

The last of the technicals rolled over as momentum indicators joined trend and volume indicators net negative. The S&P was able to dig in with a 'hammer' on channel support. The index finished just below its 50-day MA, but the proximity of channel support is enough to consider it positioned for a bounce.

($SPX)

via StockCharts.com

The Dow was the last of the indices to lose the primary trend dating back to last summer.

($INDU)

via StockCharts.com

The Nasdaq finished with an indecisive spinning top. The 20-day MA is moving lower and is on course for a 'Death Cross' between 20-day and 50-day MAs. The index is caught in the no-mans land between 50-day and 200-day MAs which often leads to scrappy action in both directions.

($INDU)

via StockCharts.com

Small Caps are similarly maligned. There was at least a bullish hammer at its 50-day MA, but it didn't quite make it down to channel support.

($RUT)

via StockCharts.com

For tomorrow, look to the newly formed downward channels for support with help from 50-day MAs where available. If this is the long awaited reversal, then the bounce should stall out at channel resistance. Buyers may want to take advantage of short term oversold conditions with the strategy to tighten stops to breakeven as soon as possible.

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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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