Monday, April 16, 2012

Daily Market Commentary: Tech Hit Hardest

I was surprised the drop in the Nasdaq wasn't greater given the sell off in Apple and Google.  However, there was enough damage to see technicals shift net bearish on higher volume distribution.  Adding to the misery was a loss of 50-day MA support and the key psychological 3,000 level which defined the early March breakout.


The S&P finished flat on the day, somehow escaping the selling which swept Large Cap Tech. Technicals were already net bearish, but neither are they oversold.


The disparity extended to the Russell 2000.  Here there was a small gain, although technicals are also net bearish and trading well below its 50-day MA.  The index is also very close to generating a bear cross between 20-d x 50-d MAs.


Adding to tech trouble is the bearish divergence between February and March swing highs and supporting MACD for the semiconductor index.  The index is loitering below its 50-day MA and attempting to create a new swing low.


Markets at today's close was enough to see key indices (with the exception of the Nasdaq 100) turn net bearish technically.  In this environment further losses are favored before a true swing low is in place, but traders can use the 5-day high/low (the sideways pattern) to define the buy/stop or short/stop set up.

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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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