Tuesday, April 17, 2012

Daily Market Commentary: Low Volume Rally

Markets rallied on positive economic data from the IMF, German economy and Spanish bond prices. The rally helped re-establish support at 50-day MAs for the Nasdaq and S&P, although the Russell 2000 is about to generate a bear cross between its 20-day and 50-day MA.

The biggest winner on the day was the Nasdaq 100. It's 2.00% gain was driven by its prior defense of its 50-day MA.  Technicals are clinging to their bullish picture, although ADX, On-balance-volume and the MACD are in decline.


The S&P regained its 50-day MA, but today's gain left it just below its 20-day MA.  But...


The Dow rallied into its prior 'bull trap' and was able to regain its 20-day MA; good news for indices which are trading just below theirs. Technicals were even able to stage a recovery with a bull cross for on-balance-volume and ADX.


The Russell 2000 is the index most in trouble.  The potential 'death cross' between its 20-day and 50-day MA will offer shorts something to work with.  But short covering will likely drive a break of its 50-day MA.


Overall, volume was disappointing, but 50-day MAs have been successfully defended and can be used as stops for long side positions in the Nasdaq, Nasdaq 100 and S&P.  Shorts will look to attack the Russell 2000 unless there is a break of the 50-day MA.

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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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