Daily Market Commentary: Bullish Setups?

The fifth day of declines has taken indices to a point where a reaction can be expected sooner rather than later. Today's setups, with indices closing near the two-day lows, offers a relatively low risk entry for longs.

The S&P finished closest to its 2-day low with an inverse hammer. If a bounce does occur and it pushes above 1,294 it will also create a bear trap. Both short and intermediate term stochastics are oversold.

The Nasdaq closed at it's low and just a few points below the April swing low of 2,706. Like the S&P it exhibits both oversold short and intermediate term stochastics. Place a stop on a loss of 2,700.

Nasdaq Breadth indicators are melting away in support; 56% of Nasdaq stocks are on point-n-figure 'buy' signals compared to 60% at the March low.

The semiconductor index also offers a long side opportunity with a bullish divergence in the CCI. Stops go on a loss of 415.

The Russell 2000 offers a more traditional candlestick set up with a bullish harami at oversold short and intermediate term stochastics. Stops on a loss of 795.

As for upside targets - assuming a bounce tomorrow - look for resistance at indices 20-day MAs.

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.


Popular posts from this blog

Markets attempt a swing low for the seven day decline

Low volume selling after Russell 2000 breakout

Minor losses pressure Thursday's reversal attempt


Show more