Sunday, October 21, 2012

Weekly Market Commentary: Breadth Weakness Continues

Another week, another set of breadth losses for the indices.

The Nasdaq was the worst hit of the indices.  The Percentage of Nasdaq Stocks above 50-day MA finished  at lows of 37%, but stochastics are only half-way towards oversold territory.


The Summation Index only saw marginal more losses than last week. It closed the week below 0, but the index doesn't typically reach oversold levels until below -600. This could take another few weeks before a swing low is reached.


The Bullish Percents similarly experienced a small loss.  Technicals are in neutral territory, but still net bearish.  Still looks to offer plenty of downside before a swing low is reached.


Despite the brief respite on the daily timeframe, the weekly chart for the Nasdaq favours a move to 2,863 support.  Higher volume selling marked confirmed distribution.


While tech struggles, Large Caps held their ground.  The Dow and S&P held support for another week.



And the Russell 2000 finished just above declining resistance - turned support.  The inverse doji offers a workable support zone, although technicals are neutral (and a long way from oversold territory).


Bullls will look to focus on Large Caps, and its continued advance.  More speculative players may want to take a look at the Russell 2000.  Shorts may find more on offer from the Nasdaq (or Nasdaq 100), as these are caught in a support no-mans land.

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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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