Thursday, August 04, 2011

Daily Market Commentary: Close at High

After the late morning drop it was going to be hard to get the 'bear traps' bulls were looking for. Although some markets performed better than others.

The S&P finished right on the cusp of the 'bear trap' marker, although it did well to make up the 25 points it lost during the day. Volume climbed to register an accumulation day. There is still a good chance it will confirm the 'bear trap' tomorrow.

($SPX)
via StockCharts.com

The Nasdaq was more traditional in it found demand just before it touched on 2,616 support. Watch for supply as it makes a second pass on its 200-day MA.

($COMPQ)
via StockCharts.com

The Nasdaq 100 had the strongest day and it was the index best positioned for support. It comfortably held its 200-day MA (in the end) and fell just shy of closing above its 50-day MA. Technicals are still net bullish and has the least amount of overhead supply to consume.

($NDX)
via StockCharts.com

The semiconductor index posted over a 1% gain, but it has a far more difficult task in creating a 'bear trap'. It remains within a well defined downward channel. While there is no shortage of overhead supply it has developing bullish divergences in MACD, CCI and +DI (to a lesser degree) to help it push higher.

($SOX)
via StockCharts.com

Finally, the Russell 2000 had a day much like the S&P. A big intraday recovery and a finish on the cusp of a 'bear trap'. Tomorrow could be the day it delivers.

($RUT)
via StockCharts.com

Tomorrow should see some upside follow through given today's volume. Look for supply when indices make it back to moving averages, especially the 20-day and 50-day MAs. These faster moving averages are more likely areas for shorts to attack.

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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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