Thursday, August 25, 2011

Daily Market Commentary: Dax Scare Triggers Selling

The 4% in 15 minute plunge in the Dax sent ripples of concern through the market. The Dax recovered some of its losses by close of business but it's not immediately clear what the cause was. Indices had already rebounded off 20-day MAs before the bad news hit. Large Caps took the biggest hit with volume climbing to register as distribution across S&P and Dow.

But tt wasn't all negative for these indices. The MACD triggered a 'buy', but on-balance-volume switched negative.


There was also a 'buy' in the MACD of the Dow.


The Russell 2000 didn't make a full test of its 20-day MA, but did see a MACD 'buy'. How will it react tomorrow?


Finally, the Nasdaq suffered its own trouble with a bearish engulfing pattern. There was no MACD 'buy', although selling volume was lighter than in Large Caps.


Ears will be on Bernake tomorrow. Expectation for a rally might prove to be too optimistic, but any strength is likely to see significant upside breaks of 20-day MAs. So bulls have something to look forward too. The flip side is yet another retest of August lows which would increase pressure for a break of its support. Although even here bulls has more to work with.

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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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