Wednesday, September 28, 2011

Daily Market Commentary: Bear Traps Negated

The 'Bear Traps' achieved on Monday's buying were undone by heavier selling today, particularly for the Russell 2000.  The only positive was the generally light volume, but 20-day MAs (and in some cases, 50-day MA) are playing as resistance.

Hardest hit was the Russell 2000. It lost over 4% as yesterday's late selling from the 20-day MA followed through to the downside. Technicals remain weak. Small Caps continue to underperform relative to Tech indices. How long can 640-650 hold as support?

($RUT):

via StockCharts.com

Next up is the Nasdaq. It lost over 2% on the day having been rebuffed by the 50-day MA. It does have the benefit of channel support to look too and technicals are not as weak as for other indices.

($COMPQ):

via StockCharts.com

The S&P was repelled by its 20-day MA after yesterday's spike high resistance. There looks to be a thick band of supply between 1,175 and 1,205. Next test for the index looks to be 1,115.

($SPX):

via StockCharts.com

In terms of more positive action is the semiconductor index. Despite losing nearly 3% (one of the bigger losses on the day) it's well off September lows. Technicals are neutral but weakening. Look for retest of 325 but don't be surprised if it doesn't make it all the way down.

($SOX):

via StockCharts.com

For tomorrow, look to Small Caps to lead down or Semiconductors to drive higher. Gauge Futures for leads. Expectation is for more downside.

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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 Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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