Tuesday, March 13, 2012

Daily Market Commentary: Funk Broken

After a relatively insipid recovery from various bearish channel breaks it was a return to force for bulls. Indices posted gains close to 2% on significantly higher volume accumulation.  More importantly, it marked new highs for the November-March rally for the majority of indices.

The S&P was a good example on the impact of today's buying.  Today's gain negated the channel breakdown (now redrawn as a rising wedge) with a clear break of 1,376 resistance, turned support.  If the wedge is to play as resistance then we should see a reversal from the open. The MACD remains on a 'sell' trigger, but this is likely to reverse tomorrow unless it's a very weak day.


The Nasdaq is slightly more interesting because despite the move to new highs, it's still under the influence of resistance from its former rising channel. The volume gain was not as impressive as in the S&P, but it still ranks as accumulation.  Like the S&P it could see a MACD trigger 'buy' tomorrow.


The Russell 2000 posted one of the biggest gains on the day, but it was unable to clear for a breakout. However, any shorts clinging to their positions will be feeling the heat, particularly if there is a strong start at the open.


While the strongest index, the Nasdaq 100, bounced strongly off its 20-day MA.


So with all the new highs, is the rally set to continue? March reaction lows are new support and a place for profit taking if lost. Shorts may try and attack from the morning given the proximity of resistance in the S&P and Nasdaq - but they may not stick around if markets don't follow through by late morning.

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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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