Tuesday, April 09, 2013

Daily Market Commentary: Bear Traps in Tech Indices

Bulls managed to mount a more substantial recovery than they have in recent days, to the extent tech indices were left with 'bear traps'.

The Nasdaq finished on its 20-day MA, a potential point of attack for shorts. On-Balance-Volume has been rising, and is close to a new reaction high. Should this happen, a break of 3,270 become favoured. Other technicals remain bearish (at least for now).


The Nasdaq 100 is similarly primed for higher prices with its 'bear trap'. The index closed above its 20-day MA, but On-Balance-Volume remains bearish.


The semiconductor index had been leading the downward slump (as marked by the sharp drop in relative strength to the Nasdaq 100), but a sharp recovery over the last three days left it with a 'bear trap' of its own.


Bull and Bear Traps can prove to be key swing points in rallies and declines. Until proven otherwise, points of weakness are buying opportunities until the lows of the 'Bear Trap' are breached.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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