Monday, March 24, 2014

Daily Market Commentary: Day 2 to Sellers

Bears were able to push markets into a second day of selling, but the last time they were able to chalk a third day of selling in a row was December. In bears favour is the lack of support; for example, the next support level for the S&P is the 50-day MA.


The Nasdaq lost breakout support as part of the bearish engulfing pattern.  However, if there is a bullish recovery Tuesday look to trade the Nasdaq as it effectively finished on converged 20-day and 50-day MAs. Volume remained high, and while it wasn't a confirmed distribution day, it was a day of heavy selling.


The Nasdaq Bullish Percents moved lower, undercutting the prior swing low. This breadth metric is on course to test the February swing low (although the Nasdaq is a long way from doing likewise).


While the Nasdaq Summation Index barely acknowledged the bounce in the parent.


The Russell 2000 experienced the biggest loss of the indices, but losses were great enough to suggest buyers might step in at the 50-day MA.


For Tuesday, it may be the best of both worlds, bears may see the Russell 2000 push down to its 50-day MA, but buyers will probably find some joy for a bounce off the same 50-day MA.

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