Saturday, July 09, 2011

Weekly Market Commentary: Bull Traps Under Pressure

Friday's sell off will have dented bullish confidence on the dailies, but on the weekly time frame the sell off made less of an impact. The bull traps carry less influence, particularly for Tech indices, although they are not fully negated yet. The sour point on the week was the relatively light volume for the buying.

The Nasdaq 100 is the strongest of the indices and the one most likely to finish a week with a new mutli-year high. Even if sellers crank up the heat there is still strong support to work with.


The Nasdaq is very close to cracking past the 2007 high, but has less support to work with (chiefly channel support).


The Percentage of Nasdaq Stock above the 50-day MA swung to a confirmed 'Buy'.  This indicator tends to be more sensitive and more prone to false signals, but for now it's a tick in the bull column.


Small Caps are similarly positioned as the Nasdaq. The only difference is the location of the bull trap which is more 'above the parapet' than the corresponding one in the Nasdaq.


And just for the sake of inclusion, the S&P is offered. But it's lagging Tech and Small Caps by a considerable margin.

Next week could be volatile, but bulls will look for a strong finish to keep pressure on resistance. However, this could mean a rough first half of the week.

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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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