Thursday, September 01, 2011

Daily Market Commentary: Bull Trap Small Caps?

It had to happen eventually, but it looks like Small Caps have blinked first. Thursday's losses took the Russell 2000 below its breakout support, pressuring double bottom breakouts for Large Cap and Tech indices. This resulted in a relative shift in strength away from Small Caps to these indices.

($RUT)
via StockCharts.com

The S&P also made gains relative to the Russell 2000 (by simply not losing as much!). The index finished on double bottom breakout support. Another day of losses will see a bull trap here too.

($SPX):
via StockCharts.com

The Nasdaq came under a little more selling pressure to leave it just below breakout support - but perhaps not enough to confirm a bull trap.

($COMPQ)
via StockCharts.com

Any losses tomorrow will confirm bull traps and drop indices into new trading ranges. Look to Futures to set the tone for the day; a gap down at the open may prove tough to recover from.

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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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