Daily Market Commentary: Technicals Net Bearish

Another day of selling stuck the bearish knife deeper into markets. Some markets fared worse than others; one of the hardest hit was the semiconductor index. The November breakout gap closed yesterday, but today the semiconductor pushed towards the November swing low. It was accompanied by expanding weakness in its technicals.

Troubles in the semiconductor index continue to manifest in the Nasdaq and Nasdaq 100. There was no surprise to see the November breakaway gaps close for the Nasdaq and Nasdaq 100, with the Nasdaq doing so on heavier volume distribution. Technicals turned net negative following the MACD and Stochastic 'sell' triggers. Will both these indices continue lower as the semiconductor index has.

The S&P lost support of its 50-day MA as a 'Death Cross' triggered between 20-day and 50-day MAs. To add to the misery, technicals turned net bearish with MACD and Stochastic 'sell' triggers.

The Russell 2000 also saw a worrying break of its 50-day MA, but technicals are not as weak as Large Caps and Tech indices.

Two days of strong selling have 'broken' many of the bullish factors in the aforementioned indices, yet no index is oversold. The lack of an oversold state suggests the selling will continue. The downside targets are November swing lows and it's looking increasingly likely these will be tested before Christmas.


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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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