Daily Market Commentary: Holds Friday's Gains

Friday was the real surprise with well defined resistance (across indices) failing to live up to its name. Monday was about retaining those gains, many indices doing so on light volume in the upper part of Friday's range.

The S&P was a case in point as technicals moved net bullish. The S&P is well positioned for further gains.


via StockCharts.com

The Nasdaq was able to add another few points, bringing the winning sequence to six days.


via StockCharts.com

As the Nasdaq Bullish Percents turned net bullish, even though today's gain was small. All three key Nasdaq market internals are bullish (Bullish Percents, Summation Index, Percentage of Stocks above 50-day MA).

Nasdaq Composite Bullish Percent Index (EOD) ($BPCOMPQ)

via StockCharts.com

Small Caps also posted a small gain, building on Friday's resistance breakout.

Russell 2000 Small Cap Index ($RUT)

via StockCharts.com

With sectorbreadth pushing net S&P bullishness to 83%, the likelihood of a substantial pullback is very high. Periods of strength where bullishness stays above 80% typically last just a few days, and this is the second day of such strength for the S&P. Will there be one more day of gain? Perhaps resulting in a 'shooting star' for the indices? Pre-market trading will dictate; a gap up will set the ball rolling.

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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.

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