Tuesday, August 09, 2011

Daily Market Commentary: Race to the Bottom - Measuring Gaps?

Today was the first day exhaustion gaps made appearances in the market. Indeed, gaps down from last Thursday may be measuring gaps, gaps which may help set a point when the decline may end.

The S&P and Dow don't show gaps at the open so projections are less accurate. The S&P kicked off last Thursday at 1,260. To get there it had fallen 80 points from the last reaction high in mid-July, so a simple projection offered a target of 1,180. But as is clear from today's action it has been far surpassed with another 60 point loss.

via StockCharts.com

The Nasdaq shows a very clear gap. The first phase is the drop from 2,862 to 2,532. The projected second phase starts from today's open at 2,447 and offers a measured target of 2,117.

via StockCharts.com

While the semiconductor index moved even further away from its channel. A measured move target for this index is close to 278.

via StockCharts.com

Finally, Small Caps took a whopper of a hit today. Here the gap offers a first phase of 843 to 715 and a projected target of 572.

via StockCharts.com

What will tomorrow bring?

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.