Saturday, March 24, 2012

Weekly Market Commentary: Breakouts Hold

It was a bit of a mixed bag for indices on the weekly time-frame.

Vulnerable Small Caps finished the week as they started, sticking around 830.  This area has been resistance for most of 2012, but larger resistance lurks at 865.


The week was a little more sketchy for the Nasdaq. The Nasdaq was able to rally almost 0.5% as it continued to run along wedge resistance. Volume eased, but the index enjoys a well established breakout that could tolerate a 200 point drop and still remain in the bull camp.


Interestingly, Nasdaq Breadth - in the shape of the Percentage of Stocks above their 50-day MA - is fishing for a swing low.  This particular index lost ground despite the gain in the parent index.


In contrast, the Nasdaq Bullish Percents is shaping a swing high (=> lower prices ahead); although past peaks have been brushed aside relatively easily in the past.


Meanwhile, the S&P closed almost 0.5% lower, but has enough wiggle room before it has to test support at 1,370.


Next week could see more of the same; a  test of breakout support looks favored given the extended nature of breakouts with bulls holding control of the dominant trend.  Resistance in the Nasdaq offers shorts something to work with, although any weakness is unlikely to last long (unless support is taken 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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