Monday, June 04, 2012

Daily Market Commentary: Friday's Loss Stalled

After Friday's whitewash there was a certain amount of relief to see the selloff stall with an afternoon comeback.

The S&P held lower channel support but remained below its 200-day MA. There is a bounce play available with a stop on a loss of Monday's low, with upside targets of the 20-day MA and upper channel resistance.


The Nasdaq recovered enough to peg to its 200-day MA with additional support around 2,750.  Lower channel support exists around 2,700, so even if today's narrow range is breached there will be another opportunity for buyers to defend.


The Russell 2000 finished with a bullish hammer and a bullish divergence with the CCI and MACD histogram. Of the major indices it's the one most likely to offer the largest % return on the next bounce as relative strength (to the Nasdaq) trends higher despite its relative position to its 200-day MA (vs the Nasdaq).


Bulls will look to buy a break of Monday's high with a stop on a loss of Monday's low.  The more bearish weekly picture may prevent buyers from holding their positions for too long, but take every day as it comes.

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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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