Tuesday, August 09, 2011

Daily Market Commentary: Techs Lead Recovery

It was another turgid day until Ben opened his mouth. Then the expected became the unexpected as buyers put the foot down and bought what they could, left, right and center. With the level of volatility in play it's very difficult to offer firm projections, with wide swings in both directions possible in a single day. So this post will be brief.

Leading the recovery were tech stocks. The Nasdaq and Nasdaq 100 managed to make it back to yesterday's highs, although buying volume was below yesterday's selling. With the easy work done, now comes the hard part...

via StockCharts.com

The Nasdaq 100 is the index most likely to test resistance and it could do so before the week is out.

via StockCharts.com

Small Caps were next on the recovery list, gaining a respectable 7%, although it wasn't enough to reverse yesterday's 9% loss. Bulls will find further gains tougher to achieve.

via StockCharts.com

The S&P was the 'laggard', falling short on the retracement, but still managing a respectable 4.7% gain.

via StockCharts.com

With the loss & recovery complete, the volatility of the past couple of days will probably start to work against traders. A walk down to today's lows over the course of 2-3 weeks is one possibility. The alternative is a continuation of the rally to the June swing low before shorts become active. The first index likely to test the June swing low is the Nasdaq 100. Look for leads in this index.

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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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