Tuesday, September 13, 2011

Daily Market Commentary: Inches Higher

Markets did what they had to do without doing a whole lot. Volume dropped again - although there was enough buying to see on-balance-volume 'buy' triggers for many of the indices.

But the real winner was the semiconductor index. It cleared channel resistance and finished just below its 50-day MA. The 50-day MA held as resistance in May, June and July - so will it be fourth time lucky? A push through the 50-day MA would really get sideline money excited. Definitely the index to watch.

($SOX)
via StockCharts.com

The S&P managed to squeeze itself even more by its 20-day MA without actually breaking through. Despite the on-balance-volume 'buy' trigger this index needs something more to excite. Remains vulnerable given proximity to support.

($SPX)
via StockCharts.com

The Nasdaq was able to push above its 20-day MA and is about to challenge the 'bull trap' for a second time. With the semiconductor index turning more and more bullish by the day it can only be good for the Nasdaq. Relative strength has swung sharply in favor of Tech over Large Cap stocks.

($COMPQ)
via StockCharts.com

The other disappointment was Small Caps. Like the S&P it has managed to squeeze a gain without breaking through its 20-day MA. Small Caps have underperformed Tech stocks since June and with semiconductors turning it could mean more of the same. Unfortunately, sustainable bull rallies require Small Caps leadership and this is not the case.

($RUT)
via StockCharts.com

Tomorrow, the focus should remain on semiconductors and what happens on the next 50-day MA challenge. If the 50-day MA breaks then it has some room to maneuver before it encounters resistance.

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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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