Tuesday, December 02, 2008

Another Downdraft?

Markets sit in a dicey position after Monday's key sell off. Volume was surprisingly light considering; whether this reflects the slow trudge back to work on the part of traders, or a genuine lack of sellers will become clearer as the week matures. I suspect December is not going to tell us much as many will want to put this year behind them as quickly as possible so it could be a very non-descript month.

Russell 2000 gives a good indication of the plight for the markets. I don't like the stranded slow stochastic in neutral territory; it suggests there is plenty of downside room before it turns oversold. How will late November lows hold as support?

With Monday's reversal we now have new necklines to consider as resistance:

Watch how the bullish divergence in money flow plays out:

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website