Friday, March 11, 2011

Daily Market Commentary: Support Breaks

Lots went on today, but the general summation was for a broad break of support across indices.

The S&P suffered heavy volume distribution as the double inside day broke down. Losses in the S&P took it below its 50-day MA. On-balance-volume triggered a 'sell' signal. Relative strength shifted away from speculative small caps to safer large caps, despite losses to large caps.



The Dow, the most consistent of the main indices, broke through rising support.



Tech indices gapped down strongly on heavier volume. Technicals for the Nasdaq and Nasdaq 100 turned net bearish. With 50-day MAs breached there is little support to look too other than 200-day MAs.




The semiconductor index gapped down strongly having cleared the 50-day MA the day before; technicals were left net bearish. Best hope for bulls is for a sideways consolidation, although the 200-day MA is looking an attractive target given the extent of recent losses.



Finally, the Russell 2000 broke channel support and its 50-day MA. Despite losses, an extension towards a sideways market seems a more likely outcome, but it offers little optimism for buyers.



Today was the first real bearish day in quite a while. Whether it develops into something more substantial remains to be seen - but it was a worrying start.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for 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.

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