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Semiconductor's (Very Modest) Breakout Phase I

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There wasn't much on offer by the close of business as early losses were returned by the close. The Semiconductor Index may have had the best of the action, although the relative gain was small. The index crept over declining resistance, but has another resistance level to challenge soon. Support at 659 remains in play, but if it breaks it becomes a shorting opportunity.

Big Gains on Modest Volume

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After the sequence of selling, it was no surprise to see Bulls make a comeback. Friday's volume was relatively light compared to the day's gains, but some indices are well positioned for a further advance. Best of which is possibly the Semiconductor Index. The index rallied from converged trendline and breakout support. Buyers can use Friday's low as the risk level for a bounce. There are a few declining trendlines to break, but if these go then a retest of 704 is next; first trendline will see a test on Monday's open.

Neckline Breakdown in S&P

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Selling returned for another day as the rising neckline connecting December and January swing lows in the S&P broke lower. Volume climbed to register a distribution day, continuing a sequence of increased volume selling. The December swing low is the next level of support and is looking like a required test.

Decent Afternoon Recovery in S&P

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It was looking tough for a while, but markets managed to claw back early afternoon losses. Bulls will be happy to see late afternoon buying which has the chance to follow through on Thursday morning (or premarket). The S&P returned to neckline support, although troubles are likely to re-emerge when it gets back to 2,064. It's not a particularly attractive long here, but shorts will have been repelled for a while. There is chance of a double bottom, which will require a break of the 2,060 neckline to confirm. Note that any such break would also negate the bearish head-and-shoulder reversal

Wild Ride...But No Winner

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Markets went one way, then the other, but in the end it was only a small loss. Volume climbed to register a distribution day, and technicals for indices gave up whatever residual bullishness there was, but price support remains in play. The S&P tagged the rising trendline, but finished below the 20-day MA. The wide range day makes it more difficult to offer guidance for tomorrow, although edging towards the bear side is probably the more likely outcome - but given the events of today, anything is possible!

Selling Continues

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The bearish head-and-shoulder pattern for Large Cap indices continued to remain in play after Monday's action. The 50-day MA is no longer support for the S&P as the angled neckline next comes into play. Angled necklines do not make for reliable head-and-shoulder patterns, so caution is advised.

Head-and-Shoulder (Bearish) Reversal Risk

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Friday's selling raises the possibility of a head-and-shoulder reversal in the S&P and Dow. Shorts are likely to use Friday's high to measure risk for such a possibility. Bulls can look to Friday's low volume as a measure of weak bullish strength, and the successful defense of the 50-day MA. A move to angled neckline support looks likely for the coming week.

S&P Rallies Past 38% retracement

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Well, I got this one wrong. I didn't think the S&P had the juice to put in the day that it did, although volume was perhaps a little disappointing. Volume did enough to register an accumulation day, although buying volume was well down on previous selling volume. In terms of technicals, only On-Balance-Volume generated a 'buy' trigger. All other technicals remain bearish. However, I still don't like this rally, but it must be respected (for now). Because of degree of comeback, a move to 2,087 is favoured, but given the retest of 1,971 failed after the New Year decline, then a test of 2,087 has a high chance of failing too. Most likely long term outcome is a trading range between 2,087 and 1,971.

Unconvincing Recovery

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A gap higher at the start of business didn't lead to any big gains, but it did manage to put some distance on yesterday's lows. Given the risk:reward potential it's probably not a great 'buy' here, but if a higher low can be posted it will give bulls something to work with. A gap higher tomorrow could allow buyers set a stop on a loss of today's lows.

S&P Experienced Overselling

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Those looking for a pullback from the December-January rally in the S&P are now looking at a Fib overshoot. The loss of the 61.8% level typically means a retracement of the entire move, which in this case is a test of 1,971.32. If this does indeed happen it will set up a possible head-and-shoulder reversal, involving a rally back to 2,079 and then a move back to 1,971 - and below.  However, first step is to see a test of 1,971.

Back in the Saddle for 2015

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Another year rolls in as the secular bull market continues its march. We have seen some modest selling, although there has been little in the way of volume to back it up.  The S&P is sitting on its 20-day MA having closed Friday on an indecisive 'spinning top' doji.

Have a Great Christmas and New Year! Small Caps - It's Over To You....

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I will be keeping posts to a minimum until the New Year. Friday finished with a bit of a high volume flourish, which added a nice gloss to Thursday's big gains. The Russell 2000 managed to go one step further with a breakout. Watch this index over the coming days; if it can hold the move it will bring other indices with it. The Russell 2000 has under-performed (relatively) all year, and if bulls are to maintain a broader market rally into a sixth year then the Russell 2000 will have to do most of the leg work. As an important side note, the Russell 2000 turned net bullish technically. The flip-side is to watch for a 'bull trap', but even here, this might instead widen the recent trading range handle as major resistance lives at 1,210/15 not at 1,190.

Relief Bounce in Markets

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Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue. The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.

Market Selling Intensifies

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It ended up a roller coaster ride with markets rallying, then suffering losses to return indices to their lows. Volume rose in confirmed distribution, and many indices now sit inside Fib retracement levels - a good place to launch a relief bounce. The S&P finished just a few points above the 50% Fib level, with the 200-day MA near the 61.8% zone - and a more probable place for a bounce.

Further Selling, But More Likely

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The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.

S&P Breakout Support Cleanly Cut

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There wasn't much for bulls to work with by the time markets closed Friday. I was somewhat surprised to see the S&P give up 2,009 breakout support without too much of a struggle. It finished at its 50-day MA which is also near psychological support of 2,000. Volume also climbed in confirmed distribution. Monday offers another chance for a bounce, but there is growing supply overhead which has the potential to kill any sustained Santa Rally.

Late Selling Puts Pressure on Friday

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Thursday saw another attempt by bulls to make up the losses of the previous day, but bears didn't wait until the next day to attack. Instead, an afternoon assault pushed markets back towards their lows, setting up a situation for further losses today (Friday). Volume was light, and there is plenty of support nearby to work, but it doesn't look good if you want to be a buyer for the longer term.  If that's your goal, refer to my table below to identify market conditions best suited to do this. As for markets, the S&P inverse hammer looks ugly. A test of 2,009 today or Monday doesn't look unreasonable.

Yesterday's Recovery Wiped

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It looked a weak recovery, and today's action quickly exposed the nature of yesterday's buying. Volume was modest, as holiday trading continues to be a theme. Window dressing into end-of-year remains a bullish overhang, but there is no guarantee Santa will keep on delivering gifts. For the S&P, look to Fib retracements and 2,009 breakout support. Buyers may attempt another run at the index then.

Late Recovery Comforts Bulls

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Not sure what to make of today. The recovery didn't look like one based on merit and will be vulnerable to early morning weakness. The Russell 2000 went from trading range support to resistance as it finished with a bullish engulfing pattern. The strength of the pattern is weakened by the lack of oversold conditions. However, price action will always be dominant. A poor start will increase the probability for a retest of today's low.

Broad Selling

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Bears paid an early visit to Santa with a broad selling. The relative loss was minor, although volume climbed to register confirmed distribution. The Nasdaq delivered on the 'bear flag' breakdown, which will give shorts something to work with.  The index finished on its 20-day MA. but this hasn't played as support in recent months.

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