Tuesday, October 18, 2011

Daily Market Commentary: Higher Volume Accumulation

A good day for markets saw the end of potential 'bull traps' with some solid buying to negate the slight bump in selling volume yesterday.

Small Caps saw the best of the buying with a rebound off the 50-day MA. If it wasn't for the higher open the day would have classified as a bullish engulfing pattern, but it was a good day without it. The next target is 731 resistance before there is a bit of room to the next resistance level at 773 (and/or 200-day MA).


Small Cap relative strength did improve against Large Cap stocks, although not enough to reverse the trend against Tech stocks.

Tuesday's rally in the S&P neatly bounced off support, ending the 'bull trap'. Volume climbed to mark firm accumulation. Next resistance is at 1,260.


Bullish focus on the Nasdaq 100 didn't disappoint. The index remains nicely positioned to challenge 2,400 tomorrow and may even manage a new multi-year high by the end of the week. This is in stark contrast to the Russell 2000 and S&P.


The Nasdaq, like the Nasdaq 100, cleared the September swing high but it has to negotiate 200-day MA resistance and a sizable gap towards 2,836 resistance. A move to a new multi-year high in the Nasdaq 100 will do wonders for the Nasdaq.


The other contributing index to the health of the Nasdaq and Nasdaq 100 is the semiconductor index. It has yet to take out the September swing high, but should it do so it will provide additional fuel to the Tech rally.


Tomorrow's focus should remain on Tech averages. Apple's disappointment is likely to suppress Tech buying but should the Nasdaq 100 prevail and manage a new multi-year high (next week maybe?) then it will help drag the S&P and Russell 2000 along for the ride.

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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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