Wednesday, September 04, 2013

Daily Market Commentary: Attempting a Swing Low

The setup had looked bearish coming into today, but the strong buying over the course of the day has the makings of a tradable swing low.  Certainly, recent lows can be used as a break line for long-side stops.

The S&P shaped a 'Death Cross' between 20-day and 50-day MAs, although On-Balance-Volume is on a 'buy' signal. Watch for selling when the 20-day MA is hit.


It's also looking a little easier for the Nasdaq. The 50-day MA is a natural defensive line for long positions. Technicals are improving, with only the MACD on a residual 'sell' trigger, but this looks set to turn bullish soon.


The Russell 2000 is also hovering just above channel support. It too has a convergence of 20-day and 50-day MAs to deal with a supply; tomorrow will be an important test of this.


The Dow had the clearest support 'buy' signal: a picture perfect trigger at channel support despite bearish technicals.


Tomorrow is likely to see the first nascent test of the swing low with overhead 20-day MA resistance. Weakness at this point offers buying opportunities, assuming swing low lows aren't taken out.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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