Daily Market Commentary: Large Caps Lead
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.
The Nasdaq and Nasdaq 100 also impressed although each remain contained by June reaction highs.
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.
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.
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!