Tuesday, August 26, 2014

Daily Market Commentary: Russell 2000 Gains

There wasn't a whole lot of action in the indices today.  The only index to come out with anything was the Russell 2000. I thought we would have seen today's gain yesterday, but it was welcome all the same. Today's gain for the Russell 2000 also resulted in a return of the net bullish technical picture.


Of the quiet action, the Semiconductor Index didn't follow through on the bearish engulfing pattern, although there wasn't a negation of it either.  I suspect this is still a shorting opportunity for the near term and today's tight intraday range allows for a narrowing of the stop placement (to a few points above today's high).


The S&P managed the closing finish at psychological 2,000, although I consider 1,990 are more important level to defend. The 'gravestone' doji is a small concern, but only as a marker for a new consolidation handle.


Meanwhile, the Nasdaq posted another 'blip' of a day on higher volume accumulation. The tight action makes for a good swing trade on break of 2-day high/low (stop on flip side) as the upside is unlimited, and the downside is 4,485 with potential follow through to 20-day MA.


All of this tight intraday action in the indices offers swing trade plays (or an options spread). Reaction breaks of narrow range days are typically short and sharp, but there is plenty of room to profit in lead indices to support or resistance - with many indices lacking overhead resistance.

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