Thursday, March 01, 2012

Daily Market Commentary: Modest Recovery

The S&P made inroads into yesterday's losses, but Small Caps finished near the lows of the day after an intraday recovery. Bears hold the advantage from yesterday with buying volume well down on yesterday's selling.

The S&P held its rising channel as relative strength expanded towards Large Caps over Small Caps.  Technical strength remains healthy.


The Nasdaq is clinging on to channel support and is offering enough for a short term buy, but with a tight stop.


But its the Russell 2000 which perhaps offers the most for shorts. The sideways consolidation hasn't confirmed a break, but a loss of 814 would give shorts something to work with.


The Semiconductors are also looking vulnerable to a more protracted decline having already lost the rising trendline.  The 50-day MA is looking the most likely downward target.


Despite today's gain it's sellers which hold the advantage. Buying into the Nasdaq and Nasdaq 100 does not seem as attractive as shorting the Russell 2000 or Semiconductor index.  Futures are likely to dictate which way to play it; a gap down will be enough to start a break of support; a gap up is no guarantee of bull safety and may be faded in early morning trading. Buyers have more to be cautious about.

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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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