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 StockCharts.com

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)
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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 StockCharts.com

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

($NDX)
via StockCharts.com

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.

($SOX)
via StockCharts.com

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'.

($RUT)
via StockCharts.com

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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