Tuesday, June 05, 2012

Daily Market Commentary: Disappointing Buying

I suppose the non-news news in Europe was/is going to make it difficult for buyers to become enthusiastic. It's also a market which hasn't really extended its woes with the indices trading near their 200-day MAs. Perhaps if the indices were trading 15-20% below their 200-day MAs it would be an easier buy (?).

Despite the overall limp buying in the markets the Russell 2000 managed a respectable +1% gain with a bullish engulfing pattern.  The bullish divergence in the CCI and MACD also suggest an opportunity for something more than a one day wonder.


The semiconductor index also did well, finishing with a bullish morning star, but given the downward trend in relative strength to the Nasdaq 100 it might not be there just yet.  However, its time will be soon as it already qualified for a swing low under the >10% loss to the 200-day MA rule.


The Nasdaq will be the index to benefit from any continued gain in the semiconductor index.  It also has a natural support area to work off given the proximity of the 200-day MA.


The S&P has the most ground to make up.  It was hit hard on Friday and two days of small gains have done little to change that.  It has also struggled to make it above the 200-day MA.


Traders will perhaps find the biggest intraday swings in the Russell 2000 and Semiconductor Index. But more cautious traders will probably look to ride any strength in the semiconductor index through  the Nasdaq or Nasdaq 100.

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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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