Sunday, July 17, 2011

Weekly Market Commentary: Consolidation

While it takes little to scare traders on the daily chart, there is little of real concern on the weekly chart. Yes, last week's volume ranked as distribution, but all key indices are trading inside well defined channels.

The Nasdaq eased away from 2,887 resistance, but weekly support is down at 2,700, some 90 points away from Friday's close.

Nasdaq
via StockCharts.com

The Nasdaq 100 has the benefit of consolidating above the 2007 high with two support levels at 2,217 and 2,130, both of which are a long way from Friday's close.

($NDX)
via StockCharts.com

There was a MACD technical 'buy' to support the earlier stochastic 'buy' in the Summation Index ($NASI). But given the signal came from outside oversold conditions it's not a strong 'buy'.

($NASI)
via StockCharts.com

The Russell 2000 is lingering close enough to 850 to keep the challenge on the 'bull trap', but it will need to break soon.

($RUT)
via StockCharts.com

The S&P has been the index which has failed to impress the most. The light volume for most of 2011 hasn't helped. It does trade inside a channel, but it's the index most likely to break first.

($SPX)
via StockCharts.com

Next week could see further losses which wouldn't upset the apple cart too much. The real test will come when channel support rises to meet price (in a sideways move) - or when price falls to channel support.

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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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