Fallondpicks.com: Weekend commentary

Markets entered a holding pattern as bullish momentum eased into tests of moving average resistance. For the NASDAQ this amounted to a test of the 200-day and 20-day MA convergence with a close below these two averages. Also tested was a support line dating back to January/February. Volume was lighter, which is good news for the bulls. The NASDAQ 100 also tested the 20-day MA, but failed to close above this average. Like the NASDAQ it traded down in lighter volume and followed with a MACD trigger 'buy' of its own. The semiconductor index closed flat thus failing to make any inroads towards 20-day moving average resistance (this index trades below the 20-day, 50-day and 200-day MAs). The Dow remained contained by the 50-day MA although the S&P managed to make small gains it still finished Friday below its 50-day MA. The Russell 2000 was unable to buck the trend and hovered around its 20-day MA.

The secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] completed bullish crossovers in the 5-day EMAs of the NASI and $BPCOMPQ, strengthening the bottom - although the latter indicators have bottomed at levels above typical oversold reversal points. Volatility has still to complete a retest of the triangle breakout; the 200-day MA is the most sensible support in this regard, but the 50-day MA provides an alternative support area.

Subscriber newsletter update:

BKD was a Breakout play for May 16th. It hit its target price for a 23% gain. THS clipped its stop from May 11th after drifting through support following an earlier bull trap. The play closed for a 4% loss.

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