Tuesday, August 07, 2012

Daily Market Commentary: Small Caps Net Bullish & Semiconductors Breakout

Relative strength clearly shows the  leadership of Large Cap stocks from the mid-July swing low, but the rally of the past three days has seen Small Caps gain an edge over its Large Caps counterpart, although Large Caps still hold a relative advantage.


Gains in the Russell 2000 have seen supporting technicals turn net bullish. Next resistance looks to be up around 820.


However, the Dow looks to be an index up against resistance.  Light buying volume suggests resistance will hold tomorrow.


It was a similar story for the Nasdaq 100.


Although there was an important breakout in the Semiconductor Index.  This, combined with the strong buying volume in the Nasdaq 100 suggests there is a stronger chance of a resistance breakout in the Nasdaq 100.


So for Wednesday, look for a rebound off resistance in the Dow, but a possible resistance break in the Nasdaq 100.  The semiconductor index and Russell 2000 offer better long term bullish prospects, but it could be a scrappy advance in each given the various resistance levels in the way of new highs.

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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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