Sunday, April 03, 2011

Weekly Market Commentary: Second Week Low Volume Rally

While dailies are keeping bulls happy, the weeklies are a little more cool. This week marked yet another low volume rally.

The Nasdaq is a good case in point.

Nasdaq

via StockCharts.com

But the Nasdaq 100 ably defended 2,217 a few weeks back and may have the strength to drag the Nasdaq and other indices to new all-time highs.

($NDX)

via StockCharts.com

Nasdaq Breadth - as marked by the Bullish Percent Index - has made an attempted defense of the 60% level. In past instances (2009) of a successful test of this level the parent index powered to new highs. Although technicals are weaker this time around (Confirmed 'Sell').

($BPCOMPQ)

via StockCharts.com

On a more positive front, the Russell 2000 is very close to new all-time highs. Should it follow the lead of the Nasdaq 100 it would put the overall market in a very bullish alignment (just needs volume!)

($RUT)

via StockCharts.com

The S&P defended 1,300 early on the week and there is plenty riding on this key level holding. Strength in Small Caps and Tech may be the trigger to push this past 1,344 towards 1,400.

($SPX)

via StockCharts.com

So what will happen this week? Small Caps and the Nasdaq 100 hold the key. Small Caps should break higher in light of strength in the Nasdaq 100. But, should the Nasdaq 100 fall below 2,200 as Small Caps flirt with 850 then control will shift back to bears. For now, bulls have market control.

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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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