Tuesday, June 28, 2011

Daily Market Commentary: Tech and Small Caps Breakout

While the S&P managed to nick a breakout it was the Nasdaq and Russell 2000 which enjoyed the best of Tuesday's trading. Unfortunately, buying volume was insipid and the number of breakout stocks was very disappointing. So while price action was positive, there was little substance to back it.

Going forward bulls will be looking for some narrow trading around Tuesday's highs, preferably on lower volume.

($SPX)

via StockCharts.com

The Nasdaq's gains, while also on low volume, are close to triggering a 'buy' in on-balance-volume. The 50-day MA is the next upside target at 2,762.

($COMPQ)

via StockCharts.com

It was a similar picture for the Russell 2000, putting it well on its way to test channel resistance. The 50-day MA is currently at 821, or just 4 points away.

AAAAAAAAD Russell 2000 Small Cap Index ($RUT)

via StockCharts.com

On a final point, the percentage of Nasdaq Stocks above the 50-day MA confirmed a bear trap. The next rally in the Nasdaq is underway.

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

via StockCharts.com

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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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