Wednesday, June 22, 2011

Daily Market Commentary: Low Volume Gain

Plenty of points put on the board, but no real volume given the gain. On a positive note, the volume registered was above yesterday's, ranking the day as an "accumulation" day.

The S&P had the lowest relative volume gain. The index closed above the April swing low at 1,294 (just) which may potentially signal a bear trap. If the latter is to prove true then it will be important the index can hold - and close - above 1,290. This will offer a platform to push higher. Today saw a MACD trigger 'buy' to follow that in on-balance-volume.

($SPX)

via StockCharts.com

The Nasdaq enjoyed more buying volume but is technically weaker. Tuesday's gain was enough to see the Nasdaq regain 200-day MA support.

($COMPQ)

via StockCharts.com

Working in the Nasdaq's favour is the bear trap in the Percentage of Nasdaq Stocks Above the 50-day MA. This swing was built off an oversold market condition and is helped by CCI and MACD 'buy' triggers. There might be enough to see the Nasdaq rally for a couple more weeks.

Nasdaq Percent of Stocks Above 50 Day Moving Average (EOD) ($NAA50R)

via StockCharts.com

The Russell 2000 reacted against its short term trend and likely caught many shorts out. The pennant broke to the upside (helped by channel support), adding over 2% and closing above its 20-day MA. It too enjoyed a MACD trigger 'buy'.

($RUT)

via StockCharts.com

As for tomorrow. The Nasdaq probably offers the best upside given the rally off an oversold breadth condition. Bulls will want the Nasdaq, Russell 2000 and S&P to consolidate their gains, providing a platform for a drive higher. A small loss would perhaps be as welcome as a small gain in such circumstances.

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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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