Wednesday, November 13, 2013

Daily Market Commentary: Breakouts Galore

Well, shorts would have had a very short-term trade; the need for tight stops apparent after today's action. Indices powered in afternoon trading to fresh breakouts, setting in motion the next phase of the rally.

The cleanest breakout belonged to the S&P. It didn't quite come with a MACD trigger 'buy', but this is likely tomorrow.


The Dow generated a breakout on higher volume accumulation as it pushed above channel resistance. What had looked to offer the clearest shorting opportunity instead turned into a quick short-cover. Shorts aren't totally out of the picture: a close below channel resistance would instate a 'bull trap', but bulls hold nearly all the cards.


The semiconductor index has traded in scrappy action since getting above 500 - but buyers look prepared to defend this level. Bears will look to a rising, bearish wedge, but as long as it holds 500 it's hard to see bears offering any long term selling pressure.  Sidelined longs may best look to this index.


With the semiconductor index holding up, the Nasdaq is about to negate its 'bull trap'. The market registered higher volume accumulation.

The Russell 2000 cleared its channel-within-a-channel, returning above the 20-day MA in the process. Prepare for a move back to channel resistance.

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