Tuesday, May 18, 2010

Daily Market Commentary: No Demand

After a 4-day weekend it was back to the selling which has controlled the market since last week's tests of key moving averages.

The S&P is on course to make another pass at the 200-day MA but it's unlikely it will find support here given the sharp angle of the drop. A retest of May lows is looking inevitable but if the angle of descent remains the same it may not stop when it gets there. But for now, assume the 200-day MA at 1,101 will offer some protection to the downside as the index has yet to close below this key long term moving average.


via StockCharts.com

The Nasdaq suffered a similar fate with a large bearish engulfing pattern, but Nasdaq is not overbought so it's a weak candlestick match. However, with because it's neither overbought nor oversold bears will have the edge on Wednesday. A "Death Cross" pending between 20-day and 50-day MA offers further bearish pressure.


via StockCharts.com

While Small Caps - with the 'strongest' technicals - remained curtailed by the descending 20-day MA. Shorts are likely very active at this moving average. More downside looks likely with the 200-day MA yet to be tested.


via StockCharts.com

Semiconductors may have overshot to the downside and is now resting against potential support; a bounce of a few days in duration could emerge here.


via StockCharts.com

The Nasdaq Summation Index is on a clear move down and last week's relief bounce did little to change that. No bottom here yet.


via StockCharts.com

The net sum of all this is to keep the powder key dry. Bounces back to the 20-day MA can be shorted with stops above last week's highs.

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