Thursday, April 12, 2012

Daily Market Commentary: Low Volume Gain

Today continued with the low volume buying from yesterday.  The lack of conviction reflects doubts on the strength of the swing low, although buyers are not working in isolation.

The Nasdaq built its rebound off its 50-day MA and breakout support, but will soon have to contend with overhead supply at the 20-day MA (3,074).  Despite the low volume over the last couple of days there may be sufficient momentum for it to push through the 20-day MA. particularly if there is above average volume trading in the morning.


The S&P overshot its 50-day MA on Tuesday's decline, but it managed to regain this key moving average.  Like the Nasdaq it will soon have to contend with the 20-day MA, but is mounting its challenge from further back which will make it more vulnerable to attack by Shorts when it gets there.


But the index most likely to see Shorts hit it hard is the Russell 2000.  The downtrending 20-day MA will soon converge with the 50-day MA, both of which lurk overhead.  There is also 814 former support turned resistance to add to the melee.


Shorts will likely have the patience to allow bulls maintain control of the rally for another day, but watch for increased selling volume at 20-day MAs when hit.

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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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