Sunday, August 21, 2011

Weekly Market Commentary: Oversold But Not Oversold Enough...

Markets took another step down. Volume dropped from the prior week, as Nasdaq, S&P and Russell 2000 stochastics reached the oversold mark. However, the week failed to end with a bullish candlestick, so there isn't a strong case for a market bottom (at least on the weekly time frame).

With the loss of 2,535 the next level to aim for is a thick band of support at 2,125. The coming week may see this edge a little closer - very little for bulls here.

Nasdaq:
via StockCharts.com

The Nasdaq 100 is also stuck in a bit of a no-mans land, although it still 'bear trap' if it was to close the week above 2,130.

Nasdaq 100 Index ($NDX)
via StockCharts.com

The Nasdaq Bullish Percents saw a modest loss on the week, but the gap is glaring.

Nasdaq Composite Bullish Percent Index ($BPCOMPQ)
via StockCharts.com

The Percentage of Nasdaq Stocks above the 50-day MA lingers below 10% for a second week. Shades of 2008 bottom - which wasn't the true market bottom.

Nasdaq Percent of Stocks Above 50 Day Moving Average ($NAA50R)
via StockCharts.com

Small Caps remain in disarray. Caught between 760 resistance and 595 support. A test of 595 looks the more likely outcome.

Russell 2000 Small Cap Index ($RUT)
via StockCharts.com

While the S&P is looking towards 1,010.

S&P 500 Large Cap Index ($SPX)
via StockCharts.com

For next week, look for more early week selling.  The challenge comes in the latter part of the week to see if bulls can recover any incurred losses. Until buyers make a show there is little to get excited about here.

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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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