Thursday, February 06, 2014

Daily Market Commentary: Relief Bounce

Today was a relatively easy day for bulls. The decline had created a bit of a vacuum, which today's rallies happily filled.

The semiconductor index worked itself off rising support, closing above the 50-day MA, but finishing below the 20-day MA.


The Dow created a 'bear trap' with a return move above the 200-day MA. The next stop is the 20-day MA, luckily, it's some distance away, although the 'Death Cross' between the 20-day and 50-day MAs suggests the rally will be brief, given technicals are net bearish too. A morning gap could account for most of these gains, but it will be important the 'bear trap' holds on any return of weakness.


The Russell 2000 rallied too, but there is no obvious support level to work off.


In contrast, the Nasdaq was able to mount a defence of horizontal support.  Look for a move back to the 50-day MA


For the morning, watch for the gap higher, but any further gains may be shot lived. Technicals still favour the bears, so bulls will need to be careful in the face of aggressive selling.

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