Tuesday, February 23, 2010

Stock Market Commentary: Bears Get Their Break

With the sequence of up days that had passed it was not surprising to see the tension break to the downside. What Tuesday's selling does is establish the down channel with the 20-day and 200-day MAs to look too for support and the 50-day MA now confirmed resistance for all bar the Russell 2000. The Nasdaq saw a bear cross between +DI and -DI although trend strength had been falling during the counter rally.

The Russell 2000 is showing more characteristics of a 6-month trading range than any form of trending market. A broad downleg in play back to what looks like range support around 560.

The semiconductor index may be in a range of its own - although it is the weakest technically with 'sell' triggers for the CCI, ADX and stochastics as it underperforms the Nasdaq 100

The S&P didn't escape the selling as the 50-day MA proved to be stern resistance. A bear cross in the +DI/-DI switches the trend in favour of the bears.

Bulls will likely look to the 20-day MAs for support, but given their proximity to 50-day MAs (and resistance) I suspect markets will push through and attempt a run to the new downward channel support. A more likely scenario is a test of 200-day MAs (which will likely come before channel support tests for many of the indices).

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