Monday, February 10, 2014

Daily Market Commentary: Technology Gains

It was relatively low key, but the Nasdaq and Nasdaq 100 were able to post a third day of gains. In the case of the Nasdaq, these gains pushed the index above its 20-day MA and for now, set a target of the high at 4,247. More importantly, the rally has managed to take out the mini-swing high from late January, giving bulls a little more confidence going forward.


The Nasdaq 100 is a little ahead of the Nasdaq, with slightly better technicals. The 'bear trap' is in full force and the next target is channel resistance. Use the rising channel support to set stops.


The S&P finished just a couple of points below its 20-day MA. Any gain tomorrow will likely be enough to take this index above this MA, following the lead of the Nasdaq and Nasdaq 100.


Both the S&P and Nasdaq 100 have seen strong relative against the Russell 2000. Small Caps have not enjoyed the same level of success since the swing low.  This index remains vulnerable and looks better suited as a short play.


For tomorrow, the tech averages are best placed for gains, but even three days of upside probably means some form of consolidation or weakness is likely in the coming days.  The Russell 2000 is a shorting opportunity, and even if bulls have control there is likely to be a low risk opportunity given the proximity of resistance.

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