Monday, September 12, 2011

Daily Market Commentary: Semiconductors Breakout?

The late day flurry of buying added some gloss to what had been a struggle through the day. The lack of volume tempered the gain, but todays buying did occur at channel support.

The clearest bounce was in the S&P. The rising channel played well as support although the declining 20-day MA is providing supply pressure.


Buying in the Nasdaq kicked off before channel support was reached. Unlike the S&P, its 20-day MA is ticking higher, although the rally wasn't enough to finish with a close above the 20-day MA.


The real action was in the semiconductors. Unlike the aforementioned indices, trading was concentrated around channel resistance, not support. Today's close may be enough to register as a breakout (it needs follow through), but it was accompanied with a sharp gain in relative strength to the Nasdaq 100. May's decline may now be at an end.


The focus for tomorrow should be on semiconductors. Gains in other indices are unlikely to change the big picture, but a gain in semiconductors would do a lot to kick start leadership for the next rally. Continued gains in the semiconductor index would spill over to the Nasdaq and Nasdaq 100.

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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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