Daily Market Commentary: Aggressive Buy?
The semiconductor index suffered the indignity of a loss of the June swing low, but also a 'Death Cross' between 50-day and 200-day MAs. However, technicals are oversold and if the index was able to close above 390 it would give credence for a bear trap and offer a good bounce play as far as the 50-day MA for starters.
Semiconductor Index - Philadelphia ($SOX)
via StockCharts.com
If semiconductors are able to dig in at this point then it will help the Nasdaq (and Nasdaq 100) defend current support, namely converged 50-day and 20-day MAs plus declining trendline. However, there were 'sell' triggers for the MACD and between +DI/-DI - but these may be short lived signals.
($COMPQ)
via StockCharts.com
The S&P suffered heavier selling than the Nasdaq and is further away from its 20-day and 50-day MAs. The S&P also saw 'sell' triggers in the MACD, +DI/-DI, and On-Balance-Volume. However, I think there is enough leeway here to suggest support is still in play and a long side play looks more interesting, although I don't think we have reached a reaction low. My sectorbreadth calculations suggest S&P bullishness ranks at 40% whereas reaction lows occur when sectorbreadth bullishness is down at 10%.
($SPX)
via StockCharts.com
Small Caps took a larger hit in selling than either S&P or Nasdaq. Again, there were new 'sell' triggers in MACD and +DI/-DI, but like the S&P and Nasdaq there is probably enough here to play long; note closing rally to declining trendline support (former resistance)
($RUT)
via StockCharts.com
So for tomorrow it all boils down to 20-day and/or 50-day MAs. Can indices benefit? There should be enough support to see buyers come in from the sidelines, but it could prove to be a short-lived bounce.
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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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