Wednesday, July 25, 2012

Daily Market Commentary: Stall in Decline

What stood yesterday, held today. One of the exceptions was the Nasdaq 100 which undercut the 50-day MA, but the prior swing low from early July held.  Technicals continued to decline.


On the other hand, the Dow was able to mount a small rally, gaining 58 points from working off its 50-day MA.  It also saw an uptick in relative strength to the Nasdaq 100, reflecting a flight to safety.  Volume was considerably lighter, which in itself is a warning sign suggesting the 50-day MA is not major support.


The Semiconductor Index was another index to benefit which rallied, but got stuck at its 50-day MA.  Another gain in the next few days to take it past the 50-day MA will set up the 200-day MA as a target.


The rally in the semiconductor index may provide the impetus for a move higher in the Nasdaq.  Today's loss confirmed a channel break, but a rally Thursday sets up the potential for a 'bear trap'.


Tomorrow is set up for a gain.  Any gain which re-establishes support of prior rising channels will potentially generate powerful 'bear traps' and good opportunity for further gains.

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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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