Tuesday, March 29, 2011

Daily Market Commentary: Bullish Engulfing Patterns

Markets opened weak but were able to make back lost ground and then some. The S&P confirmed a breakout from the downward channel on heavier volume (but light volume compared to what's gone before).


via StockCharts.com

The Nasdaq offered a sizable bullish engulfing pattern, without the higher volume accumulation, but with enough juice to outperform the S&P (on a relative basis).


via StockCharts.com

Nasdaq Breadth continued to improve with a MACD trigger 'buy' and a rise in stochastics from oversold conditions.


via StockCharts.com

While the Percentage of Nasdaq Stocks above the 50-day MA shifted technicals net bullish after stochastics crossed the bullish mid-line.


via StockCharts.com

Small Caps also cracked out a bullish engulfing pattern as it hugged former support higher. Since early February Small Caps have been outperforming Tech, and Large Caps since mid-May. As the leading index it should be favoured by buyers.


via StockCharts.com

With a number of bullish engulfing patterns appearing in different markets - albeit weakened by the lack of an oversold market (so they are not a slam dunk) - there is a good chance for some upside follow through tomorrow. As for support, the Nasdaq and Nasdaq 100 were able to lean on 20-day MAs following morning weakness. While the S&P defended its 50-day MA. Stops can be trailed on a break of these key averages.

Follow Me on Twitter

Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Zignals Trading Strategy Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

Zignals offers a full suite of FREE 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.

You can read what others are saying about Zignals on Investimonials.com.