Sunday, September 05, 2010

Weekly Market Commentary: Tech Close To MACD Trigger 'Buy

Last week's rally has drawn markets back into the middle of their trading ranges, but there is an opportunity for the S&P and Nasdaq 100 to finish next week with a MACD trigger 'Buy'.

In the S&P, until 1,129 breaks it's hard to see the post-April trading range going anywhere and volume will need to pick up. Stochastics are in no-mans-land, the recent decline failed to push either short or long term stochastics into oversold territory - has this rally come a little early?



Even with the pending MACD 'buy' the Nasdaq 100 remains range bound between 1,702 and 1,978 with the 61.8% Fib retracement at 1,678 to catch the break of 1,702 (should it come). The August reaction high at 1,919 is the challenge to overcome to convert short-term strength into something more substantial.



Breadth indicators aren't a great help. The Percentage of Nasdaq Stocks Above the 50-day MA is caught at 50% although rising from its July 23rd 'Buy' signal



While the Nasdaq Bullish Percents hasn't dropped below the sub-40% range typical of significant reaction lows.



Only the Nasdaq Summation Index has given some reason a bottom is in place; the Confirmed 'Buy' on August 13th has yet to be negated.



While the Percentage of S&P Stocks Above the 50-day MA is getting toasty at 72%; although a reaction high in the parent index typically occurs after a divergence in the breadth indicator, and this is still some weeks away.



Once the Labor Day weekend is over we can expect to see trading volume increase. What direction this volume dictates will ultimately decide the fate of post-April trading range and set the tone for 2011.

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