Thursday, September 08, 2011

Daily Market Commentary: Sellers Return

A bit of a mixed bag. The strongest performer yesterday (Russell 2000) gave back the most today. Semiconductors looked ready to break from the channel - and did so briefly - but finished the day back where it started. Large Caps escaped relatively unscathed while Tech averages experienced distribution.

The S&P had a switch to a 'sell'  in on-balance-volume. Volume was below yesterday's so no distribution. The index looks ready to make another pass at its 20-day MA.

The Nasdaq experienced distribution as the index made an attempt on breaking past the bull trap. If stochastics were overbought I would have considered today a bearish harami cross - but that isn't the case. Like a court card in a deck of cards, we are looking at two opposite head-and-shoulder patterns. Which one holds true will depend whether the August swing low or the September swing high breaks.

While Small Caps gave back a large chunk of yesterday's gain, but its relative position is away from significant support or resistance.  The index is lying very close to its 20-day MA. Whether there is support to be found at this moving average will be made clear tomorrow.

Bears likely have a slight edge tomorrow. While there was distribution in the market, it was relatively mild. Stochastics are mostly neutral, so there is no short term extreme in the market. There is the Wednesday gap to close which adds to the bearish outlook, but the Russell 2000 also has a higher gap to negate the bearish preference. How will all of these behaviors influence markets tomorrow?


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Dr. Declan Fallon is the Senior Market Technician and Community Director for 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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