Daily Market Commentary: Sellers Swoop

Supply created by the April-May bull traps came back to haunt buyers on the back of more eurozone woes. Volume climbed to register a distribution day, although for the size of the day's losses it was not excessive.

The S&P marked a second bull trap off 1,343 resistance, falling back to its 50-day MA with former declining resistance coming into play too. A decent opportunity for a long side play tomorrow.

via StockCharts.com

The Nasdaq was pegged by upper resistance from the April-May bull trap. Monday's selling dropped the Nasdaq below 2,836, but unfortunately it's not lingering near any obvious support; the 50-day MA is one or two day's selling away.

via StockCharts.com

Pressuring tech indices is expanding weakness in semiconductors. The 50-day MA has played as firm resistance and buyers have only the 20-day MA to look too before there is a push down to lower channel support.

via StockCharts.com

Small Caps never got a chance to challenge the April bull trap. Instead, the index was repelled by 855 resistance. Like the Nasdaq, it has a couple days worth of selling before nearest support of the 50-day MA is tested.

via StockCharts.com

Tomorrow may see consolidation around Monday's low. Markets just sit outside of overbought conditions despite two days of selling. This is likely the start of a more protracted decline before value re-emerges in the market. The S&P offers the best long side opportunity for Tuesday given its position at converged declining resistance and 50-day MA; who wants to catch the knife?

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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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