Thursday, July 07, 2011

Daily Market Commentary: Positive Day

With the exception of the semiconductor index, it was a good day for indices. Markets continued to hold to the upper range of Friday's gains and there was a modest uptick in volume.

The S&P is trading just below a former resistance at 1,343. Those looking for a head-and-shoulder reversal will need sellers to make an appearance tomorrow. However, the second day of narrow trading in a row, with a higher close, leaves the index nicely primed for further gains tomorrow.


Like the S&P, the Nasdaq is lurking at resistance (2,836). And like the S&P, there is the potential for a head-and-shoulder reversal - a sell off would go towards forming the right-hand-shoulder of the pattern. I expect shorts will try and get busy tomorrow.


Shorts do have one index working in their favour, and that is the semiconductor index. The past two days of selling saw the index repelled from its 50-day MA. There was also a 'sell' in the CCI and it finished today below its 200-day MA.


Small Caps are caught in the middle; extended in the short term but not yet at resistance. So expect Large Caps and Tech to be the focus tomorrow.


It's going to be hard for bulls to keep the upward momentum going. The S&P offers the best chance for a break of resistance, if it can do so it will help pull the other indices along with it.

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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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