Wednesday, April 11, 2012

Daily Market Commentary: Stop the Rot?

Yesterday's action was the first sign of concerted selling for the December-April rally, which meant today was little more than a breather. Whether bulls step in to build a swing low remains to be seen, but market breadth does offer scope for opportunity.

The Nasdaq Bullish Percents are in overbought territory, but technicals are approaching (or have indeed exceeded) the swing lows defined by the December bottom.


The Percentage of Nasdaq Stocks above the 50-day MA has reached a swing low and technicals look to support this.


While the Nasdaq Summation Index is caught in the middle; technicals are oversold but the parent breadth measure is closer to overbought than oversold.


If breadth indicators are marking a low, it's a swing low of a larger rally.  The presence of the 50-day MA offers another reason to be a buyer.


What may hold the Nasdaq back is the semiconductor index; it's trading well below its 50-day MA.


The Russell 2000 is also keeping bulls to the sidelines.  The lack of buying in speculative issues is not a recipe for success in the long run. However, the index has created a technical swing low.


If this is a swing low then yesterday's lows shouldn't be breached to a large degree (nothing more than a few percentage points) and is a good place for a stop.

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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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