Wednesday, April 07, 2010

Stock Market Commentary: Distribution - But Support Holds For The S&P

In the S&P profit takers emerged but not to the degree sellers were able to break support of the rising channel. Volume registered as a distribution day but not enough to give control to bears. Buyers now have the opportunity to defend support.

The Nasdaq churned on huge volume with a doji which was more bearish than the S&P's. Some could argue for a bearish harami cross (the doji sitting inside Tuesday's buying) with technicals growing towards the bear side. Rising support from February critical here.

Small Caps are looking similarly vulnerable with combo support of rising support and 691 an important area to defend.

The catch comes in the shape of the break and confirmation break in the Dow (based on real candlestick bodies). There has also been three distribution days since the last accumulation day for this index. A worrying precedent has been set if you are of bullish persuasion - even if the index traditionally doesn't lead the market. Note MACD trigger 'sell' to boot.

Interesting times for Thursday. I suspect bulls will have a hard time defending channel support in the S&P given the action in the Dow.

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