Daily Market Commentary: Large Caps Lead

While relative strength holds in favour of small caps it was all large caps today. There were also 'Golden Crosses' between 20-d x 50-d MAs for nearly all key indices, reflecting the growing bullish momentum in the markets. The S&P cracked through June high resistance - albeit on light volume - to set a new closing (but not absolute) high for the rally off July lows.

($SPX)

via StockCharts.com

While the Dow didn't post as great a gain as the S&P it did manage to work itself perfectly off former channel resistance-turned-support; managing a new closing and absolute high for the July rally and killing the April-July decline.

($INDU)

via StockCharts.com

The Nasdaq and Nasdaq 100 also impressed although each remain contained by June reaction highs.

($NDX)

via StockCharts.com
($COMPQ)

via StockCharts.com

One index to disappoint was the Russell 2000; Monday's gain failed to crack resistance and unlike the other indices there was no 'Golden Cross' between 20-d and 50-d MAs. This index is riding past form in the leadership department which is not the best set up for bulls, but with the rally developing it might get dragged along with it.

($RUT)

via StockCharts.com

More worryingly, the semiconductors are slipping fast. Despite the 'Golden Cross' between 20-d and 50-d MAs there was a MACD trigger 'sell' to add to the sell in the CCI and ADX. For the Nasdaq and Nasdaq 100 to follow Large Caps lead there will need to be more jazz from the SOX.

($SOX)

via StockCharts.com

While large caps are doing all the pulling they won't be able to do all the work without the help of small caps and tech. If small caps and tech continue to lag they run the risk of creating 'bull traps' out of the large cap breakouts.

Follow Me on Twitter

Build a Trading Strategy Business in Zignals



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!

Popular posts from this blog

S&P "Bull Trap"?

Image
I thought there was sufficient evidence to argue against a "bull trap" in the S&P, but it would appear the market wasn't interested in such thoughts and sellers were quick to reverse the initial push above 4,200.  Adding to the pain were new 'sell' triggers in MACD and On-Balance-Volume, although the former occurred above the 'bullish' zero line, making it a weak signal. Selling volume ranked as distribution as selling momentum picked up speed.  The index is also underperforming relative to the Russell 2000. 
Read more

"Black Candlesticks" are a concern for the S&P and Nasdaq

Image
A bright start for bulls on the back of positive $NVDA earnings wasn't enough to generate a day of meaningful gains.  However, it did help stall the losses of the last couple of days. The Nasdaq was the biggest beneficiary of today's action, but not enough to see an end-of-day finish that cleared last week's swing high, nor delivery of a large white candlestick, despite the morning breakout gap.  Technicals are net bullish and relative performance against the S&P has become consistently stronger since the start of May.  While today's candlestick I would view as typically 'bearish', today's volume ranked as confirmed accumulation (bullish). Overall, I would be looking for higher prices from here. 
Read more

Round 2 for the bearish "black" candlestick in S&P and Nasdaq

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Archive

Show more