Showing posts from August, 2011

Daily Market Commentary: Strongest Market Experiences Weakest Volume

Today held similarities to the past couple of days; small gains on heavier volume. However, one index bucked the trend. The Nasdaq 100 is the first to test supply at the 50-day MA, but it was also the only index not to experience confirmed accumulation. This weakness may come back to haunt it if buyers run to the safety of Large Cap stocks. Nasdaq 100 Index ($NDX) via The S&P still has some way to go to achieve the success of the Nasdaq 100 and despite enjoying an accumulation day it was unable to hold its early morning gain. The Nasdaq was caught in the middle. It made its initial test of 2,616 resistance, but on higher volume accumulation. Nasdaq Composite ($COMPQ) via Finally, the Russell 2000 finished slightly down on the day, although it's breakout held. The issue for tomorrow is whether some of the late day uncertainty builds into a more concerted sell off. How will market breakouts hold when the selling does start? T

Daily Market Commentary: Modest Accumulation

Yesterday's gains produced fine line breakouts which would have been easy to reverse on slight losses. But markets retained gains and Tech indices were able to put some distance from support, enough to offer some downside protection. The S&P was relatively quiet as buying focused around Tech and Small Caps.  The S&P finished the day with a small gain on higher volume accumulation. Yesterday's breakout remaining valid. The Nasdaq had the benefit of higher volume accumulation and a 0.5% gain. The index will soon be running into its first real test at 2,616 resistance. The Nasdaq 100 took the gains a step further, surpassing the trading range low and approaching the 50-day MA. Given the index had no problem regaining the trading range it's likely the Nasdaq will push above 2,616. How these indices perform at the 50-day MAs is the real question. Driving gains in the Nasdaq and Nasdaq 100 is the semiconductor index. Semiconductors gapped out of the narro

Daily Market Commentary: Small Caps Shine

In one of the best days for the indices there was a strong push by buyers to snap up more speculative Small Cap and Tech stocks. All lead indices (S&P, Nasdaq and Russell 2000) left double-bottoms following neckline breaks. Challenges for the next few days will be holding breakouts and attracting money in from the sidelines. If there was a disappointment it was the lack of volume- although light upside volume from deep oversold conditions may actually be bullish (reflecting a skepticism on the merits of the advance).  The S&P was one of the first indices to generate a MACD trigger 'buy' with today seeing a 'buy' in on-balance-volume too. There was a relative strength shift away from Large Caps to Small Cap stocks. Next upside resistance is converged 1,260 and 50-day MA. Support can be found at today's double bottom neckline and the 20-day MA. S&P 500 Large Cap Index ($SPX) : via The Nasdaq gapped past its 20-day MA and finishe

Weekly Market Commentary: Markets Oversold But In No-Mans Land

Markets are caught in an unusual state. From the perspective of breadth they are still oversold, but on a support/resistance basis they are caught in a bit of a no-mans land (with the exception of the Nasdaq 100). The Nasdaq is oversold technically but not close to a weekly support zone to make it attractive to long term buyers, despite the defense of an early August swing low on the daily time frame. Weekly buying volume was light and below prior weekly selling. The Nasdaq 100 is best positioned to lead markets higher. A thick band of support runs from 2,130 up to 2,217, as marked by 2007 reaction highs. The index isn't yet oversold but it wouldn't take much selling to push it there. Where bulls hold the cards on the weekly time frame is in market breadth. Nasdaq Bullish Percents were little changed on the week but are well within market bottom territory. Even if a market bottom is not in play it's likely not far away (at least a decent trading low). The P

Daily Market Commentary: Dax Scare Triggers Selling

The 4% in 15 minute plunge in the Dax sent ripples of concern through the market. The Dax recovered some of its losses by close of business but it's not immediately clear what the cause was. Indices had already rebounded off 20-day MAs before the bad news hit. Large Caps took the biggest hit with volume climbing to register as distribution across S&P and Dow. But tt wasn't all negative for these indices. The MACD triggered a 'buy', but on-balance-volume switched negative. There was also a 'buy' in the MACD of the Dow. The Russell 2000 didn't make a full test of its 20-day MA, but did see a MACD 'buy'. How will it react tomorrow? Finally, the Nasdaq suffered its own trouble with a bearish engulfing pattern. There was no MACD 'buy', although selling volume was lighter than in Large Caps. Ears will be on Bernake tomorrow. Expectation for a rally might prove to be too optimistic, but any strength is likely to see signif

Daily Market Commentary: Buying to Fill Gap?

Buyers did well to step in and push the market higher after a weak Monday close. Volume climbed to register an accumulation day, although buying volume is below recent selling volume. There looks to be a drive to close the breakdown gap from last Thursday, so look for follow through upside in morning trading. What happens when these gaps close and/or 20-day MAs come into range remains to be seen. It was good to see Small Caps and Tech doing most of the front running. The Russell 2000 gained almost 5% on the day, but is still a long way from June lows (90 points away). Russell 2000 Small Cap Index ($RUT) via The Nasdaq  isn't as far removed from the June low as the Russell 2000, but technicals remain weak. Watch for selling action at the 20-day MA, this may represent an either/or both combination of profit taking and new short sales (or bulls who purchased last week and are looking to get out). ($COMPQ) via The S&P did not improve much

Weekly Market Commentary: Oversold But Not Oversold Enough...

Markets took another step down. Volume dropped from the prior week, as Nasdaq, S&P and Russell 2000 stochastics reached the oversold mark. However, the week failed to end with a bullish candlestick, so there isn't a strong case for a market bottom (at least on the weekly time frame). With the loss of 2,535 the next level to aim for is a thick band of support at 2,125. The coming week may see this edge a little closer - very little for bulls here. Nasdaq : via The Nasdaq 100 is also stuck in a bit of a no-mans land, although it still 'bear trap' if it was to close the week above 2,130. Nasdaq 100 Index ($NDX) via The Nasdaq Bullish Percents saw a modest loss on the week, but the gap is glaring. Nasdaq Composite Bullish Percent Index ($BPCOMPQ) via The Percentage of Nasdaq Stocks above the 50-day MA lingers below 10% for a second week. Shades of 2008 bottom - which wasn't the true market bottom. N

Daily Market Commentary: Indecision No More!

After a series of light trades on minimal volume the market woke to quite the scare. My suggestion for a tepid decline was done and dusted by 9:30 am as cash markets stepped off the cliff. Bulls will be looking for a rally much like action following previous large day sell offs, but will buyers be willing to step in front of the bus? For the S&P sharp losses were accompanied with volume almost double the previous day. A 4%+ loss leaves it just 39 points away from the August low retest. ($SPX) via The Nasdaq gapped-and-ran lower, losing over 5%. It's only another 2% loss from the August swing low.  ($COMPQ) : via While the Russell 2000 gave up close to 6% but still has room to maneuver to August lows. ($RUT) via But one of the key victims is the semiconductor index. Any chance of a bear trap looks dusted. This will only add to the selling pressure in the Nasdaq and Nasdaq 100. ($SOX) via

Daily Market Commentary: Further Indecision

The longer the market holds off on a retest of lows, the less likely it will actually retest the low. The tight action on light volume represents the lack of interest from the sidelines, but even if the market was to take a dip lower, it may not have the momentum to go all the way down. The S&P closed with a doji on light volume. Technicals haven't recovered sufficiently to reverse 'sell' triggers (with the exception of stochastics), but this may be enough to suggest room for further upside. Relative performance has shifted strongly in favour of Large Caps over Small Caps. The Nasdaq has lost a little more ground over the past couple of days, showing a relative drop to the S&P. If a drive lower is to emerge it's more likely to start here than in the S&P. The Russell 2000 also offers losses comparable to the Nasdaq, although Tech stocks have been hit harder in the past week. If the Nasdaq breaks, look to the Russell 2000 to quickly follow suit.

Daily Market Commentary: Small Losses

Modest losses after recovering some of the midday decline. Volume was light - despite modest distribution in some indices - which keeps things bubbling along for bulls. Speculative indices took more of a hit than the more defensive S&P and Dow. The S&P held yesterday's gain after a worrying start. The tight action will result in a sharp reaction. Every Tom, Dick & Harry technician is looking for a downward test of the 1,101 low, but there is no guarantee this will happen. ($SPX) via The Nasdaq took more of a hit with volume climbing to represent distribution. The index finished with an indecisive doji, so sellers aren't in full control. Again, as with the S&P, the expectation is for a retest of August lows, but if it was to follow the Nasdaq 100 it would be up challenging 2,616. Look to futures for leads but there is probably enough to suggest another down day Wednesday. ($COMPQ) via The Russell 2000 took the bigges

Daily Market Commentary: Pushes Higher on Light Volume

Markets continued their advance for a third day, albeit on low volume. Real supply is unlikely to kick in until indices make it back to June reaction lows - the point at which past trading range support turns into current resistance (i.e. supply). The first index to reach this point - and push a little beyond - was the Nasdaq 100. There is an interesting confluence of 20-day, 50-day and 200-day MAs at 2,286 where two 'Death Crosses' are likely to occur, but any impact on the current rally will not be felt for a few days at least. Technicals are moving into neutral territory having bounced off extreme lows. ($NDX) via There is a case for a bear trap in the semiconductor index. Although the index lies at a bit of a tipping point given its proximity to channel support/resistance (depending on your outlook!). Watch for leads. The challenge on the bullish front is the 20-day MA, 381, then the 50-day MA. ($SOX) via Next on the bullish fron

Weekly Market Commentary: Volume Surge

The previous week saw long standing trends from March 2009 broken for lead averages. This week saw selling volume rise sharply, although in itself it doesn't necessarily mean a bottom is in place. Market Breadth was the real mover&shaker on the week. The last time the Nasdaq saw selling volume comparable to last week, was in October 2008. However, back then the index didn't produce a swing low until November and of course, the market bottom until March 2009. Adding to the likelihood for further losses over the coming weeks is it's non-oversold technical status. Nasdaq via The Nasdaq Bullish Percents suffered a significant gap down - the biggest for the past 5 years+. It's in deep oversold territory at 26%, although it did fall as low as 6% in 2008. ($BPCOMPQ) via Likewise, the Percentage of Nasdaq Stocks above the 50-day MA dropped as low as 5% before recovering to11%. It's low was 3% in 2008. Again, the actual low


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