Monday, January 27, 2014

Daily Market Commentary: Russell 2000 Finished on Channel Support

It was another round of losses in what proved to be a not-so-quiet Monday.  Even with the losses, the index best set for a recovery is the Russell 2000.  Today's losses took it all the way down to, and below, its rising channel; but a late day recovery brought the index back to this support level.


The Nasdaq found support at the 50-day MA after a 1% loss. After the Russell 2000 it's the next best bounce opportunity. It's also the index experiencing the strongest relative leadership (although the past couple of days have seen it lose ground against the S&P).


The Nasdaq 100 also found support at its 50-day MA in a manner similar to the Nasdaq.



The S&P was the most resilient to today's sell off, but the index is caught in a bit of a no-mans land, with the December swing low the nearest support level available.  A bounce here would set up a potential bearish head-and-shoulder reversal, where a right shoulder should not push much beyond 1,813.


Finally, the Semiconductor index finished a shade above its 50-day MA. It has a strong level of support to work off as it trades well above September-December congestion; an area the S&P and Russell 2000 have returned too, and the Nasdaq and Nasdaq 100 are flirting with.


For Tuesday, bulls have a good opportunity to test dip buying, with support levels of trend channels or 50-day MAs to work off.  Shorts would probably want to see a rally back to 20-day MA before getting aggressive, so it should be a relatively resistance free opportunity - at least for the next day or two.

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