Tuesday, September 20, 2011

Daily Market Commentary: Techs Ease

After a promising start markets gave back the gains banked by early afternoon. This in itself was unusual as recent trading often resulted in gains for markets into the close. There was also a push towards distribution in the Nasdaq 100 - the lead index.

The S&P reversed from declining 50-day MA resistance. Luckily, selling volume was light. There is a squeeze in play with a rising 20-day MA fast approaching the falling 50-day MA. This congestion could result a strong move in the direction of the moving average break (depending on which moving average breaks).

($SPX)
via StockCharts.com

Small Caps are experiencing greater struggles. The index lost almost 2% on the day, cutting below 20-day MA support. The index is significantly under-performing relative to the Nasdaq. Another down day tomorrow and it could be curtains for this and other indices.

($RUT)
via StockCharts.com

The index to watch, the Nasdaq 100, had started brightly but by the close of business it was down on yesterday's close. Volume climbed to register as distribution. The good news is technicals remain in the green and it has plenty of support to work with, the first of which is the 200-day MA.

($NDX)
via StockCharts.com

The semiconductor index finished with a bearish engulfing pattern. Technicals are net bullish, like the Nasdaq 100, and it has support at the 50-day MA to work with.

($SOX)
via StockCharts.com

For Wednesday, look for leading action in the Russell 2000. Should it lose more ground on its 20-day MA it will likely result in a loss of the 200-day MA for the Nasdaq 100 and possibly the 50-day MA for the Semiconductor index. Buyers interest is likely to remain focused on the Nasdaq 100, so a strong start should benefit this index the most.

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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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