Thursday, June 07, 2012

Daily Market Commentary: Early Burn Out

It didn't take long for bulls to lose their mojo.  The morning gap wasn't sustainable and sellers were able to take the initiative with a secondary sell off into the close.

The S&P closed just below yesterday's close but there was enough to see a MACD trigger 'buy' in support of the earlier On-Balance-Volume 'buy'.  Relative strength also attempted a swing back to Large Caps from Small Caps. With last Friday's selloff negated by yesterday's buying, how much of it will be negated tomorrow? The expectation will be for some downside, but today's selling was lighter than yesterday's buying so it may be a relatively minor loss to look forward too.


The Nasdaq lost a little more ground than the S&P but it wasn't enough to negate the MACD trigger 'buy'. And it's close enough to the 20-day MA to suggest there is still support at this moving average.


The Russell 2000 had an interesting day, cutting through 764 support, but holding above the 200-day MA. The MACD trigger 'buy' is also holding on. Watch for an intraday undercut of the 200-day MA followed by a late day rally to restore it.


Tomorrow will likely see some early bearish pressure but as Wednesday's lows are approached.  Bulls are likely to kick up more of a fight given the more bullish technical picture from the May swing low.

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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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