Saturday, September 15, 2012

Weekly Market Commentary: Big Breadth Gains

Thursday' sand Friday's gains did wonders for the weekly picture.  There were solid breakouts for the Dow and Nasdaq to follow the lead of the S&P.  For those following my Motley Fool posts we have entered a 'Profit Take' phase.  The longest consecutive time the S&P has remained 10% above its 200-day MA was 18 months over the period of 1954/55, but this may suggest the best may still yet be to come.


The Dow only generated a breakout this week.


The NYSE Summation Index cleared its consolidation and has room to run to resistance - this is good news for those looking for further gains in the S&P


Likewise, the S&P Bullish Percents are also pointing higher.


Although the Percentage of S&P Stocks is up against its maximum at 86%.  However, swing highs for this indicator rarely mark a top and only when negative divergences emerge is a warning given for a potential market top.


The Nasdaq breakout was also clearcut.


With 74% of Nasdaq stocks above their 50-day MA.  Again, at these levels are immediate top is unlikely until there is a clear divergence between breadth and the parent index. Technicals are also not overbought.


The only index not to clear resistance was the Russell 2000.  Although it's close to doing so.


Despite it been a profit take opportunity for positions taken when the S&P was trading below its 200-day MA (back in October 2011), good momentum opportunities are likely to emerge over the coming year. 

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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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