Sunday, October 24, 2010

Weekly Market Commentary: Markets Keep Rising

Small gains for the market kept markets ticking higher, but breadth indicators are showing a tiring market rally.

Stochastics for the S&P are not yet overbought and with the MACD trending higher it's not yet signaling a top. I still like a test of 1,222 before November Election results are declared.



The Percentage of S&P Stocks above the 50-day MA has defended 93% resistance; will the result be a modest loss like the summer of 2009, or a larger loss like the spring of 2010?



The Nasdaq is on course to test 2,535 as rising volume declines. Like the S&P it's not yet overbought.

Nasdaq: "


The Percentage of Nasdaq Stocks above the 50-day MA stretched to 76% before it reversed. It closed the week at 74%, but should this week's losses extend for another couple of weeks it could get ugly for the Nasdaq. A reason to take profits on gains if nothing else.

AAAA Nasdaq Percent of Stocks Above 50 Day Moving Average ($NAA50R): "



But the topping breadth indicator is the Nasdaq Summation Index. It's approaching a (former?) resistance level.



The Russell 2000 kept pushing higher on the week, but there was no significant technical change for the index.



Breadth indicators are turning peakish, more so than the parent indices. The risk of profit taking is one to watch over the coming weeks, but I suspect the real trouble will hit after the November Election results.

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