Daily Market Commentary: Narrow Channels Breakdown

Today's trading was the first real selloff since the end of September. There was some significant technical moves in the market too.

The S&P broke the narrow rising channel and left behind a potential bull trap with respect to the broader (and slower) rising channel. Volume climbed to register a distribution day. If the Bull Trap plays as true (i.e. there is no push above 1,185 by the start of next week) then the chances of a rapid move back to lower support of the broad rising channel, currently around 1,070, is very high. The upcoming 'Golden Cross' between 50-day and 200-day MA is the best long-term development (and hope) for bulls.


via StockCharts.com

The Nasdaq and Nasdaq 100 are hanging on to narrow channel support. The closing 'spinning top' candlestick at support marks the yet-to-be-decided battle between bulls and bears. Volume climbed to register a distribution day. Bulls have very little room for maneuver, but if bulls are to step up, Wednesday will be the day.


via StockCharts.com

The Russell 2000 lies in a similar predicament to the Nasdaq and Nasdaq 100.


via StockCharts.com

The index taking the hardest hit was the semiconductor index. Tuesday's losses dropped it to converged 20-day and 200-day MAs. There were also 'sell' triggers in the MACD and CCI. Any loss tomorrow and its the 50-day MA at 334 which is next up.


via StockCharts.com

Wednesday is looking at critical day. Further losses and the market will be looking at an intermediate correction which may last up to 3 months. Any morning buying and there may be a few days worth of longside before the worry returns.

November's elections will likely mark the real test for bulls.

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