Tuesday, July 12, 2011

Daily Market Commentary: Semis Rout

Despite Ireland's late attempt to spoil the party it was a reasonably quiet day for the markets - with the exception of the semiconductor index.

The S&P could still be considered at converged support of the declining trendline and 50-day MA, despite the couple point close below the 50-day MA. There was an on-balance-volume 'sell' trigger to boot.


The Nasdaq struggled, not helped by the lack of immediate support. Nearest support zone is converged declining trendline and 50-day MA down at 2,760; a days selloff away.


Weakness in Nasdaq was heavily influenced by the selling in the semiconductor index.  There was no respite from the selling as the index shed close to 3%, slicing through its 20-day MA straight from the off. The next line of defense is the June reaction low, and if that fails, down to channel support. 


The Russell 2000 held the losses from the open, closing with a doji. Like the Nasdaq, it's about a days selling away from support. Aggressive buyers off the doji can use a break of Tuesday's lows for a stop.


For tomorrow, look for a little relief rally, unless Italy decides to join Ireland in the Junk pile! However, I suspect most traders will be looking at EURUSD; note break of $1.3962.

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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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