Wednesday, February 19, 2014

Daily Market Commentary: Failed Challenge on Resistance

No surprise to see the S&P stall out as it challenged prior highs around 1,850. What's important is how the S&P behaves as sellers take a run at it. First support level is the 50-day MA, then 1,810, then the 20-day MA. Shorts may be able to squeeze something out of this on the way down, stops on a close above 1,850, but probably not one to hold on to for too long.


The Nasdaq breakout is under pressure after today's loss. It hasn't lost its breakout, but should it do so it will leave a 'bull trap' and offer a shorting opportunity. A close below 4,231 confirms a 'bull trap'.


The Russell 2000 closed with a bearish reversal after touching what was neckline resistance. It remains the best shorting opportunity of the indices. Stops go on a close above 1,165.


The next few days will be interesting. Sellers will attempt to push their advantage, which may give shorts one or two days to work their magic: look to MAs (50-day or 20-day MA) to take partial profits and let the rest ride.

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