Thursday, April 17, 2014

Daily Market Commentary: Nasdaq, Russell 2000 Against Steep Resistance

Markets kept with the theme of Tuesday's bullish reversal, adding another percentage point in gains as shorts found themselves on the wrong side of the trade. However, the Nasdaq and Russell 2000 now find themselves nestled against channel resistance - although given the steepness of this resistance, it's unlikely to hold for very long.  Aside from further gains, a small loss here could be seen as a victory for bulls, which would set up a challenge of highs from last week's large one-day reversal.  Volume wasn't fantastic, but given the Easter weekend, not unexpected.


The Russell 2000 also got an uptick in its CCI.


Large Caps had the best of the action, moving solidly inside the prior trading range. The net effect is to broaden the trading range parameters, with neither bull or bear having a clear advantage. Bulls will probably look to improving technicals from an oversold state to suggest they have a slight edge, but supply can be expected to reappear on an S&P push above 1,880.


Bulls may find it best to focus on the Semiconductor Index. The index is close to 'bear trapping' at the 50-day MA and technicals are oversold enough to support a decent bounce. The index is trading well above the 200-day MA, and is in a strong bull trend.


So, it looks like bulls still have something more to play for. A big loss doesn't seem likely (futures are down a little in the morning) barring some major news event, but it may be a slow grind higher.

Have a good Easter. Back on Tuesday.

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