Sunday, September 28, 2014

Daily Market Commentary: A Recovery Lacking Volume

It was a noble effort on the part of bulls, but it lacked the volume to really pressure bears.  However, Friday's action did offer bulls something to work with on Monday, while bears have one option to play with.

The Nasdaq is working on a possible 'bear trap' with a return above the 50-day MA, and a close above 4,485. Risk is measured on a loss of 4,475.


The Nasdaq 100 returned above channel support with 4,000 holding as psychological support. This is facing increasing technical picture, with distribution ruling the last six consecutive heavier volume days in a row.


The Russell 2000 closed with a bullish harami. The August swing low is playing as support with stops likely lingering below 1,107 with 1.093 as a secondary level.


Potential short plays come in the form of the S&P. It could go either way, the index finished below 1,987 resistance, but above its 50-day MA. A close above 1,987 would negate the short play, so if this is to play this way it would need a gap down and/or a quick morning undercut of the 50-day MA.


The Dow is working resistance around 17,150. The combined 'bull trap' and 'evening star,' with bearish MACD trigger 'sell' does give shorts something to work with on Monday. However, the 50-day MA did play as support on Friday, and may do so again.  Morning strength would weaken the short play, but the short side is favored until 17,350 is taken out.


The semiconductor index is more neutral, not close enough to support to be a long, but trending in a direction of the 'bull trap' and rising support.


For Monday, morning weakness will offer shorting opportunities in the S&P and Dow, although a neutral to strong open will look to confirm 'bear traps' in Nasdaq indices; a recovery on a weak open will likewise encourage long positions in Nasdaq and Nasdaq 100.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. You can read what others are saying about Zignals on Investimonials.com.

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