Thursday, October 29, 2009

Stock Market Commentary: Relief bounce

If volume was higher there would be a stronger case for another reaction low in the markets - but this thought is on hold for now (stochastics for many of the indices aren't quite there for a reaction low). There were at least bullish crosses of the 50-day MAs for the S&P, Nasdaq and Nasdaq 100; but there is a long way to go before the 50-day MAs are challenged for the semiconductors and small caps.

Have small caps done enough to negate the breakdown - probably - but real resistance will kick in on the convergence of the 20-day and 50-day MAs.

The S&P finished bang on former support, even with a 2.25% gain.

Look for some upside follow through Friday, but if there is a gap up it could be hard for bulls to push it higher - especially if 20-day MAs are nearby. Doji for Friday?

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.