Showing posts from September, 2011

Daily Market Commentary: Techs Hit Hardest

It was a relatively mute day for Large and Small Cap indices, but Technology wasn't able to escape the glare of traders. China troubles brought the focus firmly on the Nasdaq and Nasdaq 100. The heavier volume selling ranked as distribution for the Nasdaq, but buyers were able to do enough by the close to preserve channel support. ($COMPQ) via The selling in the Nasdaq 100 resulted in a widening of support. The selling dropped it below the 50-day MA but not enough to take it outside of the consolidation. However, there is a MACD trigger 'sell' with on-balance-volume close to a 'sell' trigger too. ($NDX) via On the plus side, the semiconductor index took a hit, but it has managed to keep itself above former consolidation resistance-turned-support. ($SOX) via The S&P is wavering around consolidation support. Today's upper intraday range spike reflects the overhead supply.  In all likelihood

Daily Market Commentary: Bear Traps Negated

The 'Bear Traps' achieved on Monday's buying were undone by heavier selling today, particularly for the Russell 2000.  The only positive was the generally light volume, but 20-day MAs (and in some cases, 50-day MA) are playing as resistance. Hardest hit was the Russell 2000. It lost over 4% as yesterday's late selling from the 20-day MA followed through to the downside. Technicals remain weak. Small Caps continue to underperform relative to Tech indices. How long can 640-650 hold as support? ($RUT) : via Next up is the Nasdaq. It lost over 2% on the day having been rebuffed by the 50-day MA. It does have the benefit of channel support to look too and technicals are not as weak as for other indices. ($COMPQ) : via The S&P was repelled by its 20-day MA after yesterday's spike high resistance. There looks to be a thick band of supply between 1,175 and 1,205. Next test for the index looks to be 1,115. ($SPX) : via S

Daily Market Commentary: Attempted Bear Traps?

Today's market gains were a little better than I expected, although trading volume remained tepid. There is a chance markets could generate 'bear traps', but for these to emerge volume will need to pick up as part of the follow through. The S&P is one of the indices leading the 'bear trap' call. The index regained former channel support with a 'buy' trigger in on-balance-volume. The next resistance point is the 20-day MA, but key will be staying inside the regained channel. ($SPX) : via The Nasdaq doesn't have the 'bear flag' considerations as it honored support of its rising (if bearish) channel. ($COMPQ) via However, the Russell 2000 is caught at the half-way line. Shorts may have more to gain by going in aggressive at the open, but action in Tech and Large Cap indices favour higher prices. Use Futures for leads. ($RUT) via The strongest index remains the Nasdaq 100. It wo

Weekly Market Commentary: Bear Flags Break

The cracks which emerged on daily timeframe charts extended into the weekly charts. Adding insult to injury was the higher volume selling which accompanied these breaks.  Markets are further threatened by oversold conditions which may lead to an acceleration of the declines into crashes.  The Russell 2000 is doing the leading down and the likelihood for a test of 593 over the coming weeks looks very high. Large Caps suffered a similar fate to Small Caps, but Large Caps have underpeformed throughout 2011. Large Caps will be the last to turn - be it higher or lower - so look elsewhere for leads. The downside target for the Dow is 9,641. In contrast, the Nasdaq hasn't dropped out of its 'bear flag' consolidation. It also enjoys the benefit of an uptick in stochastics (momentum). While it may eventually suffer the same fate as Large and Small Caps it's likely to be the first one to recover. Technicals for the Percentage of S&P Stocks above the 50-day MA

Daily Market Commentary: Too Much For Shorts?

When markets finally opened, Futures had pushed them well away from yesterday's close. The panic continued through the day despite a weak bounce in morning trading. Late day buying failed to mount a challenge to close the breakdown gap. The very weak open probably kept shorts out of the market, but there was no shortage sellers, many of whom probably bought over the past two months. However, any rally into today's gaps is likely to see shorts turn up the heat. The Russell 2000 gapped past the September reaction low and the more important August low. However, a rally to close the gap seems more likely. Look for short activity to pick up around 660. Technicals fell back into net bearish territory on MACD trigger 'sell'. ($RUT) via The S&P sliced through channel support on heavy volume distribution. Technicals returned net bearish on a MACD and On-Balance-Volume 'sell' trigger. Unlike the Russell 2000, it's hanging on to the August s

Daily Market Commentary: Bull Trap Nasdaq 100

Troubling action in the indices. Large Caps escaped relatively unscathed despite the heavy loss as channel support held. Tech have a little more support to work with but also suffered distribution. Small Caps were just kicked in the teeth with areas of support running out. I had talked about the importance of the Nasdaq 100  but today's distribution selling looks to have generated a 'bull trap'. The selling brought the index below its 200-day MA, although the 50-day MA remains available as support. However, the damage looks done and shorts will be looking to take advantage of any low volume retest of 2,337. ($NDX) via The index struggling most is the Russell 2000. The index finished the day at minor support but the loss of the 20-day MA leaves 650 as the only major support level protecting against a collapse. Adding to the misery was the loss of nearly 3.7% - by far the worse performing index. Buyers have to step in tomorrow if a broader rout is not

Daily Market Commentary: Techs Ease

After a promising start markets gave back the gains banked by early afternoon. This in itself was unusual as recent trading often resulted in gains for markets into the close. There was also a push towards distribution in the Nasdaq 100 - the lead index. The S&P reversed from declining 50-day MA resistance. Luckily, selling volume was light. There is a squeeze in play with a rising 20-day MA fast approaching the falling 50-day MA. This congestion could result a strong move in the direction of the moving average break (depending on which moving average breaks). ($SPX) via Small Caps are experiencing greater struggles. The index lost almost 2% on the day, cutting below 20-day MA support. The index is significantly under-performing relative to the Nasdaq. Another down day tomorrow and it could be curtains for this and other indices. ($RUT) via The index to watch, the Nasdaq 100, had started brightly but by the close of business it was down

Daily Market Commentary: Tech Take the Glory

Monday started poorly with weak Futures and this remained the theme throughout the day for Large and Small Cap stocks. However the Nasdaq and Nasdaq 100 were able to beat the malaise and put in a strong finish. The Nasdaq 100 had the best of the days action. Friday saw the push above converged resistance and 200-day MA on higher volume accumulation and today saw the breakout maintained. The Nasdaq 100 is the first index to turn net bullish technically. ($NDX) via Technicals for the Nasdaq turned net bullish today, although consolidation resistance has yet to be breached and the 200-day MA is a long way from been challenged. ($COMPQ) via Supporting rallies in the Nasdaq and Nasdaq 100 is the semiconductor index. Unlike the aforementioned index it closed over 1% lower, although it did so after challenging resistance in the 381-385 range. The index has its 50-day MA nearby to lend support on this pullback. ($SOX) via Tomo

Weekly Market Commentary: Weekly Accumulation

Bulls stepped up the buying to finish the week with net accumulation. The 'bear flags' across the different indices remain intact, but market breadth offers enough to suggest the rally will continue. The S&P closed just a shade above a thick band of resistance at 1,209. It's a fine line as to whether it counts as a break or not. In favor of the bullish thesis is the stochastic 'buy' signal on the higher volume accumulation. ($SPX) via The Percentage of S&P Stocks above the 50-day MA climbed to 43.8%. Even if the recent reaction low proved to be a false bottom as in October 2008, there is enough to suggest the rally could continue for another 1-2 weeks. ($SPXA50R) via The rally in the Nasdaq took the index from bear flag support all the way to resistance. Volume buying was good, so there is reason for optimism for the 'bear flag' to break this week. And the Nasdaq Bullish Percents also saw a 'buy&

Daily Market Commentary: Important Tests

After a continuous sequence of gains markets have approached areas of potential (strong) resistance. The only indices with room to maneuver are Large Caps: S&P and Dow. The S&P has plenty of room before it gets to channel and 50-day MA resistance. Other indices are more likely to influence tomorrow, so expect Large Caps to follow - not lead. ($SPX) via The Nasdaq finished at converged 2,616 and 50-day MA resistance. Shorts will be chomping to take down the 4-day rally; will they succeed? ($COMPQ) : via Resistance in the Nasdaq 100 is a little stronger given convergence resistance is at the 200-day MA, not 50-day MA. The main plus is the net bullish turn in technicals. ($NDX) via While the semiconductor index also has resistance to overcome at 381. ($SOX) via Small Caps did little today and are unlikely to do too much tomorrow. All eyes should be on Nasdaq, Nasdaq 100 and Semiconductors

Daily Market Commentary: Net Accumulation

Buyers returned after two days of low volume gains. Gains coincided with breaks of supply, chiefly the 20-day MA in the S&P and the 50-day MA in the semiconductor index. Starting with the S&P. The index pushed above its 20-day MA (something the Dow couldn't achieve) at the same time relative strength shifted from Large Caps to Small Caps (bullish). ($SPX) via The Nasdaq was able to cut through its September 'bull trap' and head towards a test of converged resistance at 2,616 and declining 50-day MA. ($COMPQ) via Nasdaq breadth (as marked by the Summation Index) is on the verge of a net bullish signal. This would offer a bullish environment for the Nasdaq of a few weeks at least. via Although the Nasdaq 100 was pegged back by its 50-day MA (and is close to wedge resistance) ($NDX) via The semiconductor index left no doubt. It blew past its 50-day MA setting up a challenge on 381

Daily Market Commentary: Inches Higher

Markets did what they had to do without doing a whole lot. Volume dropped again - although there was enough buying to see on-balance-volume 'buy' triggers for many of the indices. But the real winner was the semiconductor index. It cleared channel resistance and finished just below its 50-day MA. The 50-day MA held as resistance in May, June and July - so will it be fourth time lucky? A push through the 50-day MA would really get sideline money excited. Definitely the index to watch. ($SOX) via The S&P managed to squeeze itself even more by its 20-day MA without actually breaking through. Despite the on-balance-volume 'buy' trigger this index needs something more to excite. Remains vulnerable given proximity to support. ($SPX) via The Nasdaq was able to push above its 20-day MA and is about to challenge the 'bull trap' for a second time. With the semiconductor index turning more and more bullish by the day it can


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