Tuesday, April 03, 2012

Daily Market Commentary: Retains Gains But Pressure on Semiconductors

It was a down day for markets, but losses weren't enough to reverse Monday's gains.  Volume did climb to register a distribution day, but until volume converts into late day selling it isn't killing the rally.  The real concern is the semiconductor index.

The issue with the semiconductor index is the 'bull trap' generated from the failed break of 440 last week. Up until today there was the possibility of a quick reversal in the 'bull trap', but the -1.6% loss left it sitting on 20-day MA support. This weakness will pressure the Nasdaq rally and restrict further gains the longer the 'bull trap' holds.


The Nasdaq rally will also be contained by a break in the trend in the Percentage of Nasdaq Stocks above the 50-day MA; it's a small break, but it might prove telling.


The Nasdaq is holding its ground despite weakness in breadth and semiconductors.


Small Caps are holding on to 833 support.


While the S&P had a quiet day, although it will soon have to contend with converging support and resistance of the rising wedge.


If loses extend tomorrow it will hurt the semiconductors most which will eventually catch up with the Nasdaq.  Shorts are likely to jump on semiconductor weakness, but bulls have options with Large Caps likely to be the last to fall.

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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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