Thursday, October 27, 2011

Daily Market Commentary: Second Day of Accumulation

A huge day in global markets brought some significant technical breaks for individual markets. All markets enjoyed confirmed accumulation, following on from yesterday's higher volume buying.

The S&P sliced through its 200-day MA while clearing 1,260 resistance. Any weakness from this point should see support at 1,260. Despite the big gain, relative strength continued to shift away from Large Caps towards speculative Small Caps - this is an overall bullish development.


The Nasdaq gapped through its 200-day MA and held the 200-day MA as support in an intraday test. The index currently sits in a void of supply until 2,836 is tested. This is a good opportunity for bulls to further drive the advance.


Market leading Small Caps enjoyed a clear gap break of resistance, turning 731 from resistance into support. Upcoming is a tricky convergence of 773 and 200-day MA resistance. Note - while it's market leading it has come from a greater point of weakness, hence its current position below its 200-day MA.


Finally, semiconductors continued to show their metal with a fine gap breakout. The worst of the selling looks done and long term buyers could do very well here. Pullbacks will offer great trade opportunities, particularly near 20-day and/or 50-day MAs.


It's hard to see how markets could extend after today's 3%+ gain on heavily overbought conditions. Bulls should be happy if Friday's losses (assuming a loss!) were contained with a 1% of today's close (per market) - anything else should be viewed as a bonus!

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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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