Monday, May 14, 2012

Daily Market Commentary: Further Selling

All markets experienced another round of selling as Europe dominates the headlines.  The selling wasn't particularly heavy, but it was damaging in taking indices away from support.

The S&P is tempted by the siren call of the 200-day MA as technicals drift lower. However, relative strength continued to strengthen against the Russell 2000; so what money is flowing into the market is flowing into Large Caps.


The Nasdaq is riding declining support lower, which is cold comfort if you are long.  Bullish divergence in MACD histogram offers an inkling a bounce will happen soon.  Like the S&P, looks ready to test its 200-day MA.


The Russell 2000 broke support in a worrying shift after 4 days of holding.  The 200-day MA isn't far away and there is a good chance a 'bear trap' if tomorrow it can break above today's high.


The only index left clinging to a trade-worthy support level is the semiconductor index.  Use a loss of the 200-day MA for stop placement.


For Tuesday, the semiconductor index remains the best opportunity for longs.  Shorts have little to work with until there is some form of bounce - preferably to the 20-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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