Monday, December 03, 2012

Daily Market Commentary: S&P Resistance at 50-day MA

It was going to happen at some point, but sellers made an appearance after a strong upward swing from the November swing low. Resistance played out at the 50-day MA, but selling volume was below average, and below Friday's higher volume accumulation.  Technicals also turned net bullish by the close of business.



It was a similar story for the Nasdaq. Technicals also turned net bullish.


Helping out the Nasdaq was the net bullish turn in the Percentage of Nasdaq Stocks trading above the 50-day MA.  This breadth index is usually the first to turn bullish, but the rally for November is substantial, increasing the probability for a decent Santa Rally.


The Russell 2000 also experienced net bullish technicals. Like the S&P and Nasdaq, it encountered resistance at its 50-day MA; but this resistance also corresponded to horizontal resistance.  As a result, there may be more selling pressure for this index than for the aforementioned indices.


I'm still liking a Santa Rally off the November low.  Today's losses at 50-day MAs suggest the start of a buying pullback, but it might come down to Fibonacci retracements for the optimum time to buy (Fib retracements set at the range of November swing lows and today's high).

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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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