Daily Market Commentary: Ehh... Bit of a Rollercoaster
With that knowledge it's going to be hard to see buyers coming in without first tentatively testing the lows of Thursday. The bad news is that Large Caps lows are below Dow and S&P 200-day MAs (Nasdaq 100 too). If 200-day MAs were to break the tone of the market will no longer be buy-the-dip, but get-out-stay-out.
So in the short term - look for markets to revisit the lows with any rally (*cough*) likely to stall at newly created resistance at 50-day MAs.
As for individual indices, the S&P confirmed net bearish technicals; both stochastics and on-balance-volume registering 'sell' triggers on yesterday's distribution.
The story was no different for the Nasdaq, but at least yesterday's lows at the 200-day MA (as opposed to through it) do give some comfort for a future defense at this moving average.
And in the Russell 2000 the 200-day MA wasn't tested. Although technicals are net bearish. The bulls story will be told in large part by what happens to Small Caps over the coming days and weeks.
The Primary Gain phase is still in play but is looking like it will end soon with a Primary Gain top already in place.
The selloff is playing into seasonal factors and may not bottom until September/October. From that point we are looking at a much tighter market with sector advances dominating the 'rising tide' approach. But this advance could last many years as is typicaly of cyclical bull markets (even in secular bear markets).
So while bulls are hurt, they are by no means out of the game.
Follow Me on Twitter
Build a Trading Strategy in Zignals; Read how and earn real money (once out of Beta) in this PDF.
Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies for global markets, also available through the latest rich internet application for finance, the Zignals MarketPortal or the Zignals Trading Strategy MarketPlace.
Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too.
Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash.
Read what others are saying about Zignals on Investimonials.com.
JOIN US TODAY - IT'S FREE!