Tuesday, March 08, 2011

Daily Market Commentary: Risk at 50-day MAs Paid Off

For defenders of the 50-day MA it was another good return for the risk takers. The S&P went from a channel break to a potential bear trap as support was regained. Volume climbed to register a modest accumulation day.

($SPX)

via StockCharts.com

The Nasdaq opened just above its 50-day MA and was able to finish modestly higher after an intraday violation. Volume was well down on the previous day's selling.

($COMPQ)

via StockCharts.com

The Russell 2000 has been the most volatile these past few weeks making it good day trade material. But despite the intraday swings it has been honoring channel support, which has give bulls something to play with (not to mention the 50-day MA).

($RUT)

via StockCharts.com

The Nasdaq 100 finished much like the Nasdaq with a defense of the 50-day MA. But unlike the Nasdaq, it has a bull trap to deal with.

($NDX)

via StockCharts.com

Finally, the semiconductors finished with an indecisive doji at the 50-day MA. If there is an index set for losses tomorrow it's the semiconductors. A run below 444 could create a panic.

($SOX)

via StockCharts.com

So, not for the first time, we again look to 50-day MAs as the rallying point for bulls. However, I think gap breakdowns are bigger sources of supply than 50-day MAs are to demand.

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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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