Wednesday, October 10, 2012

Daily Market Commentary: Weakness Intesifies

There was no last stand by bulls. Instead, further selling knocked more indices into net bearish territory.

The semiconductor index was again the worst hit index.  The next point of support for the indices is the double bottom down at 350. There is very little in the way of alternative support to suggest it won't make all the way there.


The Nasdaq lost further ground to its channel support, and was unable to regain 50-day MA support. Volume also climbed to register net distribution. The next support level is down at 3,000, likely 2 or 3 days away from a test.


The Percentage of Nasdaq Stocks above the 50-day MA also turned net bearish technically. Soon, fewer than 50% of Nasdaq stocks will be above this key moving average.


Small Caps were least impacted by the selling, digging in at 50-day MA support.  However, the lack of selling couldn't prevent a net bearish turn in technicals. It's still the index most likely to lead higher.  While it didn't play to bulls favour today, there is still a good chance it will do so tomorrow.


The S&P also experienced selling, but it hasn't challenged support of the rising channel. However, technicals clung on to their net bullish picture.


Second time lucky for a rally? Again, the Russell 2000 looks the index most likely to lead a bounce.

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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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