Sunday, January 22, 2012

Weekly Market Commentary: Another Good Week For Indices

Nothing fancy for the week, just steady gains for indices.  These gains keep in play the rally from October. Market breadth continued to improve alongside index gains. Certain market breadth indicators are at declining resistance dating back to 2010, important tests, because breach these and the rallies will be well placed to continue for the next few weeks (if not months).

The Percentage of Nasdaq Stocks above the 50-day MA is one such market breadth indicator at resistance. With 72% of stocks above this intermediate trend average it suggests the Nasdaq is only in the early phase of its rally (a couple of weeks ago the percentage of Nasdaq Stocks above 50%, was just above 50%).


Nasdaq Bullish Percents are above the 50% mark


And the Summation Index is above zero


These breadth indicators suggest there should be enough for the Nasdaq to break declining resistance (already breached for Small and Large Cap indices) and push on to new highs.


The Russell 2000 has made it to neckline resistance and it's next big area of supply


The S&P managed resistance breaks in the parent index and supporting market breadth indices ($NYSI shown)


While resistance might stall things in the Nasdaq for a week or two, it should eventually follow the leads of the Russell 2000 and S&P.  Bulls maintain their edge and should be able to hold on by the end of the coming week.

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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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