Monday, November 09, 2009

Stock Market Commentary: Bullish Technical and Accumulation Day

It feels like it's summer all over again. For some indices this was the first accumulation day in weeks, but for all it was a significant technical improvement. The market has the look and feel of the July reaction low with market breadth in a very similar position.

The Nasdaq enjoyed a solid break of the 20-day MA with a bull cross for stochastics, on-balance-volume and directional index [+DI > -DI]. Only the MACD has left to turn. There was enough buying to register a modest accumulation day, similar to the summer but below the buying of September.

The Nasdaq 100 went a step better with a MACD trigger 'buy' and therefore a net bullish technical picture; note the strong out-performance relative to small caps.

The Dow gives some indication as to what may come for the Nasdaq et al. A solid performance pushed it to a new closing high for the year with all technicals net green (today saw a MACD trigger 'buy'). Large Caps don't normally lead but that is not to say they can't.

The only real concern is for small caps which closed just below converged ('death-cross') 20-day and 50-day MAs. Given what has passed for the other indices it's hard to see how this can make the same level of recovery.

As I stated near the beginning, market breadth is in a very similar position to that of the July reaction low; have we enough to see a rally into the New Year? My predictions for breadth played out better than my expectations for the Nasdaq!

Dr. Declan Fallon, Senior Market Technician, November 2009 has seen a significant upgrade and is on course to becoming the eBay of finance with our new Beta MarketPlace and a new rich internet application for finance, the Zignals Dashboard. Zignals now has new fundamental stock alerts, stock charts for Indian, Australian, Frankfurt and soon Canadian stocks, tabbed stock list watchlists, multi-currency portfolio manager, active fundamental system stock screener and trading system builder. New Forex and Index data.