Monday, October 03, 2011

Weekly Market Commentary: Weekly Consolidation Break

The troubles on the daily timeframe extend into the weekly. The consolidation ('bear flag') breaks on the weekly charts have handed impetus back to the bears and created a whole new source of overhead supply to consume any emerging demand. For many of these 'bear flags' the most likely outcome is a measured move lower.

Leading down are Small Caps. Friday saw a clear break of the consolidation. The Russell 2000 looks destined to test 593 support. For bulls to have a shot there needs to be a smooth rally-and-break of 760 - anything less will only lead to indecision.


The Nasdaq, like the Russell 2000, is looking for a measured move lower. The immediate target is 2,160 with last ditch support down at 2,100. The weekly chart shows a new 'sell' trigger in on-balance-volume.


The Dow was another index to crack. It had already generated a 'sell' trigger in its on-balance-volume although stochastics have not confirmed an oversold condition.


The S&P was the only index to perhaps hang on to consolidation support. Like the Dow it has a 'sell' trigger in on-balance-volume, but stochastics are no longer oversold.


As for next week. if bulls can prevent the consolidation breakdowns from expanding it will be a job well done. European fundamentals will play a heavy role in next weeks action; Greece hogging 99.9% of news is an all-too obvious "victim" but it's hard to see where the good news is going to come from. Bulls have their work cut out.

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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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