Saturday, September 08, 2012

Weekly Market Commentary: Strong Week

It was a great week for bulls, a strong end-of-week for indices was supported by similar gains in breadth.  Breadth gains were particularly good as they negated what was looking like a swing high, and a likely market top.

The Percentage of Nasdaq Stocks above the 50-day MA has room for upside at 67%, taking out the last swing high.  This indicator peaked at 81% in the early part of 2012, but as a leading indicator it suggests there is still more upside to come.


The Nasdaq Bullish Percents have plenty of upside room with resistance around 62.5% and the indicator at 56%.  But there is a lengthy bearish divergence dating back to 2010 which could prove problematic down the road.


The Nasdaq Summation Index has only crossed the zero line and offers the largest bullish potential (with no bearish divergences) of all the breadth indicators.  The last swing high was at 659. To get there quickly would require 3-4 weeks of gains, so it's possible we could see the current rally continue for a while longer.


Positive breadth in the Nasdaq sets up things nicely for next week after the break of 3,100.  No overhead resistance to cloud the picture. Technicals positive.


The Russell 2000 hasn't yet achieved the clear air enjoyed by Large Cap and Tech indices, but it did enjoy the biggest relative gain on the week and register a breakout.  Much better stuff from Small Caps - a leading index in bull market rallies.


The S&P confirmed its break of 1,400.  Only breakout volume was a little disappointing.


The scene has been set for a period of extended bullishness, but it might be a slow start for next week given the gains from Thursday and Friday.

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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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