Friday, December 16, 2011

Daily Market Commentary: Weak Rally

It could have been so much better after a bright start gave way to apathy and a disappointing close. There is a great deal of reluctance on the part of sidelined bulls to step in and bargain buy. In such an environment markets typically drift down in the absence of buyers, irrespective of active selling in the market.

If sellers do pick up the pace it could be a whole lot down, although with indices near oversold territory it might just be a brief collapse.

The S&P managed to rally to newly established resistance at converged 20-day and 50-day MAs, but had eased back by the close. Volume was down, which will offer some comfort to bulls (but probably not much). The November swing low continues to call...


The Russell 2000 also managed to do just enough to take it to 20-day and 50-day MAs, but achieved little more. Stochastics switched to a 'sell' trigger as Thursday's finish left the index well positioned for a short attack. However, a strong push above the 20-day MA could force those shorts to cover.


The Nasdaq 100 suffered the worst of the action; the index may only have registered a -0.3% loss, but it closed near the low of the day.  The November breakout gap has closed (=> no breakout gap), leaving the next target the November swing low.



Nasdaq 100 weakness has likely taken its cue from the semiconductor index, which continues to descend lower.


Friday's action should start in shorts favor, but early morning strength could question their convictions. Markets do not appear to be oversold enough to suggest a trading low has been reached.. 

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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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