Sunday, March 13, 2011

Weekly Market Commentary: Markets Down But Not Out

A mix of bad news and not-so-bad news. On the bad news front was the confirmation of the bull trap in the Nasdaq, mixed in with a 'sell' trigger in its MACD. The reversal off 2,818 is a concern given a 100+ point rally will be required to bring back the index above this resistance level. The weakest of the indices.

Nasdaq

via StockCharts.com

The Nasdaq 100 hasn't lost is breakout with support some 82 points below (so still plenty of room to maneuver). But it did generate a MACD trigger 'sell' which will add pressure on the bull side.

($NDX)

via StockCharts.com

The ground the Russell 2000 lost dropped it to former bull flag resistance-turned-support. While this is not ideal and it came on the back of a MACD trigger 'sell' too. Luckily the index is by no means as bearish as the bull trap in the Nasdaq.

($RUT)

via StockCharts.com

The S&P is clinging on to the break of 1,300. There is no MACD trigger 'sell' to compound the selling, but it's well off 2007 high resistance.

($SPX)

via StockCharts.com

Market Breadth dropped sharply from the prior week. The Percentage of Nasdaq Stocks above the 50-day MA cracked below the 50% mark and is at a level which is frequently associated with sharp drops in the parent index.

($NAA50R)

via StockCharts.com

The Nasdaq Bullish Percents also dropped, but it's well above the bear crash zone. This may protect the Nasdaq from the sharp drop suggested by the Percentage of Nasdaq Stocks above the 50-day MA.

($BPCOMPQ)

via StockCharts.com

The Nasdaq Summation Index is caught in the middle. It's just above the zero mark and has a long way to go before it reaches levels associated with a market bottom.

($NASI)

via StockCharts.com

Bulls will have to step up to the plate to protect the Russell 2000 and S&P from losing bullish scenarios. The Nasdaq has its work cut out for it, but at least it has the breakout in the Nasdaq 100 to lean on.

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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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