Monday, April 13, 2009

Stock Market Commentary: Bull Traps Negated

Friday saw the strongest of the action with bull traps in the Semiconductor and Small Cap Indices negated. However, resistance was not breached for the Dow. The break in Small Caps was the most important as it looked like a swift move back to support c330 was on the cards. There is plenty of room to push to the 200-day MA currently at 545.

The other area of strength (and good news for long term bulls) was the continued strength in the semiconductor index. It has run into its next test - the 200-day MA; much how it acts here will have knock on effects to the other indices (Nasdaq and Nasdaq 100 in particular):

Is there more to come? Markets have been overbought since the middle of March. The next move down is more likely to be short and sharp; 50-day MAs look to be the most attractive prospect for support for this scenario.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.