Tuesday, December 13, 2011

Daily Market Commentary: Moving Averages Hold as Support Despite Losses

The struggle between bulls and bears continued Monday as Friday's buying was reversed, bringing indices back to the lows of last Thursday's selling. However, volume was lower, so there was no distribution and key moving averages held as support. While indices haven't broken above 200-day MAs they haven't turned away either; buying pressure on this key moving average is likely to lead to upside breaks across the indices as part of the 'Santa Rally' effect.

The S&P held its 20-day MA despite a brief intraday violation. Relative strength swung away from Large Caps towards Small Caps; although whipsaw has been an issue in recent weeks.

The Nasdaq dug in at the 50-day MA as it's about to lead against the S&P since early October. In the meantime the 'bull trap' marked by 2,616 remains.

The Russell 2000 is also suffering with a 'bull trap' as today's finish held the 20-day MA.

For Tuesday, bulls can play a long position in the Nasdaq, S&P or Russell 2000 with a stop a few points beneath the 3-day low and/or nearest moving average.


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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 Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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