The sizable gap down from Monday was filled in late afternoon trading before bears returned to bring the indices back to their open price. The Nasdaq enjoyed a higher volume up day but the gap reversal suggests more downside to follow Wednesday. The Russell 2000 shared a similar fate but held its 50-day MA by the close. Look for further downside in all indices tomorrow Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

In an important first step towards building a more sustainable rally than we have seen in the past the number of stocks trading above their 200-day MAs rose for both the Nasdaq and S&P. With these new near term highs in place it will be important for this figure to stabilize above new support (former resistance) if buyers are going to accept a more stable market. The Nasdaq is more important than the S&P in this regard. Other sentiment indicators point to an intermediate timeframe top - so the new downleg is only in its early phase. 567 Nasdaq Stocks currently trade above their 200-day MA. 366 Nasdaq Stocks trade above their 200-day MA and have a price greater than $1 196 Nasdaq Stocks met the aforementioned conditions and had a 60-day MA of Volume above 100,000 shares a day 4 Nasdaq Stocks met the aforementioned conditions and made a new 90-day high. These were Dollar Tree (DLTR) DTS Inc (DTSI) J2 Global Communications Inc (JCOM) Optimer Pharmaceuticals (OPTR) Dr. Declan ...

Sizable gaps down on Automaker worries came on light volume a bullish sign. Large caps suffered slightly heavier volume selling because of GM but given their recent volume history it was hardly excessive. There was a shift in relative strength with small caps underpeforming against Tech indices but holding their edge over large caps {Tech > Small caps > Large caps} . Resistance remained in play for the Russell 2000; a 'sell' trigger also crept in for its CCI All of this looks like the start of the buying pullback. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

No significant change on the weekly picture. What I am liking most is the developing Adam-Eve bottom in the Nasdaq 100 even if the earlier 'buy' signal was weakened by the return of stochastics to oversold territory; watch for the break of resistance There is a case for a breakout in the S&P: The Percentage of Nasdaq stocks above the 50-day MA is overbought and this does at least point to an upcoming period of weakness, although stochastics suggest there is a little more upside in the near term (the S&P version hasn't quite touched overbought levels). But the indices themselves suggest this pullback will be a buying opportunity. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bulls chalked up another victory as the S&P cleared declining resistance from November-January. Volume was light and the 50-day MA is more likely to be support than the former resistance line on the next pullback. The best gains came from the semiconductor index which is well on its way to testing its 200-day MA. A very positive development for the market as a whole. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bulls will have enjoyed the past couple of weeks but there is a concern under the surface, chiefly the weak money flow into the market. Money flow is on course to shift into positive territory but by the time it does it could be the trigger for the next downleg, much as it did last November. Contributing to such an outcome is the heavily overbought condition of stochastics. The good news on this is the next downleg will likely turn out to be the best time to buy as a push to new lows doesn't feel like it's in the current market (for Nasdaq/Technology stocks). Time will tell but tech averages have behaved very well over the past 4 months and this strength will eventually reveal itself in a respectable rally. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Early afternoon trading was pointing to a clear downward day but bulls pulled enough out of the bag to keep the technical picture net positive and put another question mark after when is the next decline to occur? Higher volume accumulation also helped push some weakening on-balance-volume action back into positive territory. Bulls will be looking for the indices to knock out reaction highs and build new higher reaction lows; the current rally has given the indices a good chance of doing so. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

So far every attempt at a rally has been battered down by the weight of negativity in the market place. During this time sentiment has fluxed with the exception of one market indicator - The Percentage of Stocks above the 200-day MA. Since last September's collapse the percentage of stocks trading above their 200-day MA has failed to break the 10% mark as other sentiment indicators oscillated. Markets have now reached a stage where this threshold is under threat. If it can break it will suggest a desire on the part of buyers to see past the short term and look more positively at holding stocks over the long term. We may be seeing the early stage of this break in the Nasdaq - a very positive development given the tech sector's importance as a lead out in an economic recovery. How is this of use? The next leg down in the Bullish Percents / Percentage of Stocks above the 50-day MA / Summation Index will provide the basis for a low risk buy. March lows will provide the basis for th...

While yesterday's gains looked like short covering, today was a day when neither shorts were willing to step back in with conviction or existing longs were prepared to take profits. There was a lot to like here but that doesn't mean the market is not vulnerable. The only index to creep below its 50-day MA after breaking through was the Russell 2000. The obvious concern on further losses tomorrow is an accelerated downward move as this could quickly morph into a 4-6 day decline, perhaps knocking 10% off the indices and bringing them back to the mini-congestion zone from a week ago. As before, the index to watch is the semiconductor index; it's short term overbought (only have to look at CCI and Stochastics to see that) but it has dual support of the 20-day and 50-day MAs to look too on the inevitable pullback. Will bulls drive this on or will bears become more aggressive? The first hour of trading will be interesting. Dr. Declan Fallon, Senior Market Technician, Zignals.com...

Huge gains followed what looked to have been a shorts' play but the lack of volume suggested it was these same shorts who pressured the indices Friday who were now forced to cover today. The lack of volume was telling, especially given the significance of some of the breakouts; namely the break of Nasdaq declining trendline and the push above the 50-day MAs for the Dow and Russell 2000. These will have significance over the coming days but they do suggest bulls are enjoying stronger fruits. But the index to watch is the semiconductors; it is well clear of the 50-day MA and its 20-day MA will soon cross above the 50-day MA. Plenty of room to the 200-day MA too. The end is closer than we may think. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

I have been covering the public list writers at Stockcharts.com for a number of years. The order of the leading commentators ranked by hits - not votes - excluding lists of pure stock analysis and lists which lacked comments has changed through the years as certain authors come (and go) in popularity. My own list which has been public since 2003 reached the heady heights of 12th once upon a time but is now a clear also-ran (ehhh... 49th to be precise). March 2009: Top 7 Yong Pan Tomas Leszczynski Maurice Walker Richard Lehman Joe Reed Ted Burge David Bailey March 2008: Top 7 Joe Reed Ted Burge Maurice Walker Richard Lehman Yong Pan Jack Chan Howard Blackstein March 2007: Top 7 Joe Reed Ted Burge Matthew Frailey Mitchell Meana (Inactive) Jack Chan Robert New Richard Lehman My first review was done in July 2006 and featured Matthew Frailey Robert New Mitchell Meana (Inactive) Michael Winfree Dan Basch (Inactive) Steven Swink (Inactive) Who's your favourite? Dr. Declan Fallon, Senior...

Markets have remained resilient in the face of acute buying. How does it look for the week ahead? Yong Pan shows a more neutral picture for the short term which he considers toppish but I think might actually be more bullish. However, Pan's next chart fits better with a short term top thesis As does the convergence of sentiment (NYUPV and NYADV) at heavily overbought levels: Piling on the bear case is a very bearish looking 30 min chart: New kid on the block, Tomas Leszcynski , uses ribbon analysis and it's very pretty in a very non-bullish way. Based on this simple chart it's going to take a while before bulls can look at the market with confidence. He has a website, santoren.com , which I haven't checked yet but readers should click on through. A slew of bullish signals off the March lows: Here is another take on the SPY's 30 minute; the lack of annotations probably suggests a more neutral outlook Or is this a major top? Richard Lehman has started to look at mo...

A powerful week long rally has taken some indices up against resistance. In the case of the S&P the index finished at former November support. The higher volume ranks it as an accumulation week and the MACD 'buy' signal is another positive. Stochastics remained deep in oversold territory so the improved strength is no indication of an immediate reversal. The Nasdaq had a more low key week with lighter volume and no test of resistance. The MACD is already net positive but like the S&P, stochastics are deeply oversold. With the exception of the Percentage of S&P Stocks above the 50-day MA none of the breadth indicators made it to oversold conditions before bouncing. Not sure what this means for these indicators (and therefore the market as a whole) but it feels like this bounce has come a little too soon - not that this will worry bulls... Is there a retest to come? Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and sto...

The market must be screaming for a correction but so far bulls have dug in their heels. Yesterday's weak selling had the potential to be so much more and it will provide some comfort that a charge to the exits was not triggered. If the next downleg can be relatively orderly (i.e. low volume) then the stage will be set for a more sustainable rally rather than the "V" recovery we have seen. Note how the Nasdaq is nestled against declining resistance. The alternative is a bear trap; the touch of resistance so near the 50-day MA on overbought stochastics will be too tempting for shorts to ignore. If resistance is breached the Nasdaq could make a rapid gains to 1,600 and for once shorts might be the ones left crying. Technicals are finding some bullish legs, particularly the MACD. Shorts may be more tempted by the Dow which did show heavier volume selling, stayed below its 50-day MA and made a picture perfect touch of November lows (support turned resistance). The Dow is certa...

Tech picked up the pace with one of the heaviest trading days in months. The Nasdaq pushed above its 50-day MA taking its lead from the Nasdaq 100 yesterday. Technicals all finished net green as relative strength swung back in favour of Small caps, then Tech and finally Large Caps - the most bullish alignment for markets. Another positive is the consolidation breakout from the semiconductor index. This will give indices another push, particularly the Nasdaq and Nasdaq 100. Another day to suggest it's time to Buy-the-Dips Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

My early call which saw me take a position in the USO (wish I hadn't done that and stuck with DXO) looks to be coming around for a second look. Questionable if it will make another run at $2.40 before it mounts a challenge of $3.62 but it is showing better technical health. As for my USO ; an initial Zignals call ( Register and head to Charts to get access to the Call feature) was stopped out at $28.89 - although I have held my personal position in the ETF. I have made another call for the same target of $39.99 with a new stop. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Low volume gains did at least reverse the priors days losses but it did not relieve the overbought nature of the market. For the Nasdaq the 50-day MA is fast coming into range - one more higher close could be enough to spark another round of buying. Technical strength also enjoyed a significant improvement (stochastic cross of mid-line with a pending 'buy' for on-balance-volume and 'buy' in +DI/-DI). The Nasdaq 100 broke through the 50-day MA which should help the Nasdaq do likewise Large caps enjoyed the same gains but still have work to do - the question is whether there is still enough in the tank for them to break from their malaise in the current run. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

No surprise to see bulls taking money off the table after the gains in the market. Volume climbed to register a distribution day with some heavy trading in the Dow and S&P. Looking for some follow through downside tomorrow, the inverse doji lending to the bearish tone. On a relative scale, large caps have begun to outperform tech stocks; both of which are outperforming small caps. not the most bullish of environments. The intermediate time frame picture improved with a MACD trigger 'buy' in the Bullish Percents with all key sentiment indicators above their bullish 5-day EMA triggers. Buy the dips. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

After last week's hiatus what's on the menu for this week after the (rare) gains. Yong Pan opens with a bearish short term outlook. His sentiment show a mix of red (bearish) and blue (neutral) signals. Intermediate term more bullish than bearish. I still view the VIX has been remarkably complacent since the start of the year. Look at Peter's VIX channel to see how 'quiet' it has been: Friday's doji not warming to anyone Peter notes the 'buy' on the weekly, but these big white candlesticks nearly always retrace in the entirety. Maurice has put a copyright warning on his work so I won't be covering his analysis from here on unless he wants inclusion. You may need to bookmark the link so you can track him. His charts are always worth a look. The commentary below is copyright material. Any reproduction without permission is prohibited and violaters will be prosecuted to the full extent of the law. Richard Lehman has kept with his narrow upward channel...