Daily Market Commentary: 200-day MA Tests Came Sooner Than Expected

In a volatile day, the S&P and Nasdaq both paid visits to their 200-day MAs only to finish the day near yesterday's close. Volume climbed to register a distribution day for the S&P and an accumulation one for the Nasdaq.

The S&P spike low finished right at the 200-day MA. A late afternoon rally helped recover the bulk of the losses. This sets up an interesting scenario for tomorrow morning.

($SPX)

via StockCharts.com

The Nasdaq was able to go a step further than the S&P. It finished the day 'engulfing' the real body of yesterday's candlestick and with a higher close. This leaves the index set for a challenge of its 20-day MA.


Helping the Nasdaq was the stronger than expected gain in the semiconductor index. Thursday saw a close in the semiconductor index above what was achieved by key indices. This helps offset the huge slide experienced by this index.


Finally, the Russell 2000 spiked all the way down to former pennant support (but didn't drop far enough to test its 200-day MA) before it recovered back to its 20-day MA. Next challenge is its 50-day MA.


For tomorrow, watch for further upside in morning trading to build on today's gains. The fear is the gap down. Should this happen it could be a long day for the indices with Thursday's lows the target. But the picture looks more bullish than bearish.

Follow Me on Twitter

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.

Zignals offers a full suite of FREE financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash.

You can read what others are saying about Zignals on Investimonials.com.

JOIN US TODAY - IT'S FREE!

Popular posts from this blog

S&P "Bull Trap"?

Image
I thought there was sufficient evidence to argue against a "bull trap" in the S&P, but it would appear the market wasn't interested in such thoughts and sellers were quick to reverse the initial push above 4,200.  Adding to the pain were new 'sell' triggers in MACD and On-Balance-Volume, although the former occurred above the 'bullish' zero line, making it a weak signal. Selling volume ranked as distribution as selling momentum picked up speed.  The index is also underperforming relative to the Russell 2000. 
Read more

"Black Candlesticks" are a concern for the S&P and Nasdaq

Image
A bright start for bulls on the back of positive $NVDA earnings wasn't enough to generate a day of meaningful gains.  However, it did help stall the losses of the last couple of days. The Nasdaq was the biggest beneficiary of today's action, but not enough to see an end-of-day finish that cleared last week's swing high, nor delivery of a large white candlestick, despite the morning breakout gap.  Technicals are net bullish and relative performance against the S&P has become consistently stronger since the start of May.  While today's candlestick I would view as typically 'bearish', today's volume ranked as confirmed accumulation (bullish). Overall, I would be looking for higher prices from here. 
Read more

Round 2 for the bearish "black" candlestick in S&P and Nasdaq

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Archive

Show more