Sunday, June 21, 2009

Weekly Market Commentary: Breadth Top

Modest losses on the week for the indices weren't enough to prevent a bullish cross of long term momentum (stochastics [39,1]) for the Nasdaq and Nasdaq 100.

On the other side of the fence, market breadth had taken a marked turn to the downside. MACD trigger 'sells' for the Percentage of Nasdaq and S&P stocks above the 50-day MA. The rally is currently been supported by fewer and fewer stocks above their 50-day MAs.

Summation Indices also marked the week with a new reaction low.

However, over the course of a bull market such divergences were not uncommon and the bulk of the last cyclical bull market operated under a negative divergence between breadth and the parent market. How these conditions play out in a cyclical bear market will be made clearer over the coming week but it's a clear warning sign the best of the rally is behind it for now.

Enter to win the Trader's Business Plan prize of a free psych test and free access to the trading plan development program. Retail value $398

[1] Register at Zignals.
[2] Go to Charts and select a stock (you will be prompted to download Microsoft Silverlight)
[3] Click on the YourCall Icon

[4] Enter a Call by giving a stop and target price; make sure the Time Period is set to Short (month)
[5] Enter as many calls as you like up until the end of June; these can be long or short signals
[6] Send me your Zignals Userid so I can track the calls made ( or post it in the comments section of this post. In your email make reference to the competition.
[7] The Zignals member with the stock giving the highest return from either a target hit or expiration after 22 trading days will win the prize. Only stocks or FX prices listed on Zignals qualify for entry (no pink sheet stocks). The announcement of the prize winner will be made at the end of July.

Good luck!

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.