Wednesday, June 29, 2011

Daily Market Commentary: Higher Volume Gain

There was a modest follow through to two days worth of gains. Volume picked up, but it was well below recent selling volume. With a three day winning sequence ("three white soldiers") in the bag, now may be time for bears to apply some pressure and test how resilient buying has been.

The S&P followed MACD and On-balance-volume 'buy' signals with one between +DI/-DI. The 50-day MA lies less than 1% away, so there is a logical supply area to restrict further gains.

($SPX)

via StockCharts.com

The Nasdaq didn't get as big a kick on the volume buying. It finished with a doji on resistance (with additional resistance at the 50-day MA), but enjoyed two 'buy' triggers for on-balance-volume and +DI/-DI. The doji has the look of a bearish "shooting star", so watch for a gap down and selling to follow.

($COMPQ)

via StockCharts.com

The Russell 2000 also closed with a doji, smack bang on its 50-day MA. There was also a bullish cross between +DI/-DI and it's on the verge of a 'buy' trigger in stochastics [39,1]. Should the latter happen it will be net bullish technically. Another positive is its leadership role against the Nasdaq and S&P; money flowing away from Large Caps to more speculative Small Caps is bullish going forward. It just has to survive the potential gap down from Wednesday's doji.


Tomorrow will be about consolidating the gain. The Nasdaq and Russell 2000 are primed for a gap down, so it will be up to buyers to step in and prevent bears from gaining any momentum.

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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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