Wednesday, September 14, 2011

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).


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.


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.


Although the Nasdaq 100 was pegged back by its 50-day MA (and is close to wedge resistance)


The semiconductor index left no doubt. It blew past its 50-day MA setting up a challenge on 381 resistance. Technicals are very close to turning net bullish. Even if a broad market sell off was to occur there is probably enough demand here to see any retest of August lows as a buying opportunity.


For the purpose of making whole, the Russell 2000 had a quiet day. It managed to move above its 20-day MA, but not enough to trouble its 'bull trap'.


For tomorrow, keep an eye on the Nasdaq 100. It's close to channel resistance with the 50-day MA pressuring - shorts are likely to want to take a pot shot here first. If the market makes early gains, then the Nasdaq at converged 50-day MA and 2,616 resistance is the next area to watch for activity from shorts. The worry for the S&P is it's proximity to support. Despite three days of gains it would only take one big sell  off to break support and lead markets lower.


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