Wednesday, March 09, 2011

Daily Market Commentary: Semiconductors Carry Weight of Indices

For many indices it was quiet day. The S&P was able to dig in at its 20-day MA in tight trading, clinging to channel support at the same time.

($SPX)

via StockCharts.com

The Nasdaq closed with an inside day of an inside day, right above its 50-day MA. This tight coiling action typically unwinds with a sizable move. Two days of distribution in three suggest this move will be down.

($COMPQ)

via StockCharts.com

Lending weight to the "next move is down" story was the clean slice of the 50-day MA by the semiconductor index. It's a worrying because everything above 445 is now supply. It also pushes the index into a no-mans land between 50-day and 200-day MAs.

($SOX)

via StockCharts.com

The same vulnerability exists for the Nasdaq 100 at its 50-day MA as does for the Nasdaq.

($NDX)

via StockCharts.com

Thursday's morning trading may be very tentative, especially in the Nasdaq and Nasdaq 100. Bulls will hope the semiconductor index can catch a bid and regain its 50-day MA, but hope is a dangerous game in trading.

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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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