Tuesday, January 15, 2013

Daily Market Commentary: Divergence

A very mixed day for the markets.  Bulls saw the best of the action in market leading Small Caps.  This just reinforced the relative gain between Small Caps and Technology indices.


The S&P finished in the middle.  It was able to recover early losses and is nicely primed to push higher. On-Balance-Volume has effectively flat-lined, so the 'sell' trigger is less of a concern than it might otherwise be.  The 20-day MA is handy place for stops if going long (as is today's low for the more aggressive).


The Nasdaq suffered enough of a loss to leave behind a 'bull trap'. It also added with a 'sell' trigger in On-Balance-Volume (which is trending down => bearish), not to mention a relative shift towards more bearish Large Cap stocks. It's not looking so good for bulls, although there was a key 'Golden Cross' between 50-day and 200-day MAs.


Bulls have primed the market for further gains, but the Nasdaq has thrown a little doubt into the equation with its 'bull trap'.  The S&P will probably be the one to offer most for day traders, although the Russell 2000 is doing the most leg work.

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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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