Tuesday, October 23, 2012

Daily Market Commentary: Further Selling

It was substantial move down for the indices, bringing the Nasdaq and Russell 2000 to their respective 200-day MAs.  These indices will offer something more for bulls to work with tomorrow.

The Nasdaq is well placed to stage a rally on Wednesday. Selling volume, while higher, was below what passed for Friday's action.  Technicals are all bearish, but stochastics are oversold, thus offering a starting point to mount a recovery.  A stop just below the 200-day MA should be sufficient protection.


The Russell 2000 made a larger spike down to its 200-day MA.  Where there is a concern, it's that the spike down to the 200-day MA occurred below the band of support marked by 820.  A bright start in the morning would offer confidence which could be built on.


Losing out in the shuffle was the S&P.  It broke below the rising channel, sending it on its way towards its 200-day MA.


The Dow turned net bearish technically.


With two days of heavy selling in three, there is a good chance bulls will find opportunity in the Nasdaq and/or Russell 2000, with a relief rally.  Shorts should now start paying attention to the S&P and Dow Jones Index.

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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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