Sunday, April 14, 2013

Weekly Market Commentary: Breadth Recovers, But Still Net Bearish

The Masters has me distracted, so I will just show two charts:


The Nasdaq has had a very good run of form of late, but it hasn't really changed the breadth picture a great deal.  Bulls will look to the new swing low which will be confirmed if the Nasdaq Summation Index crosses above its 5-day EMA, and other breadth indicators hold their 5-day EMA.  Bears will see a dominant bearish trend, particularly in the Percentage of Stocks above the 50-day MA, and suggest the current run is nothing more than a relief rally.

From a trading perspective, you need to protect yourself against false breakouts.  Because of the vulnerability of the breadth metrics it will be important 3,270 holds as support (for the Nasdaq).  A loss of 3,168 would confirm a 'bull trap'.

The Nasdaq 100 shows the battleground nicely. Horizontal support at 2,825 is key.


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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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