Tuesday, January 03, 2012

Daily Market Commentary: Breakouts?

Markets are getting back into the swing of things; a bright start saw weak resistance taken out by solid breakout gaps. Volume was respectable enough and technicals for many indices are now net bullish.

Over the course of Christmas week the S&P saw a Golden Cross between the 20-d and 50-d MAs. Resistance at 1,260 has turned into support, leaving the next challenge the October reaction high at 1,292.

The Nasdaq gap took the index to the 200-day MA, but it hasn't quite broken through.

The Russell 2000 is similarly positioned below its 200-day MA. A late morning sell off took the index back to the open price, but didn't violate the breakout gap.

The Dow enjoyed a 'Golden Cross' between 200-day and 50-day MAs and a resistance breakout. There was also a break of the October reaction high. All of which is good news for other indices.

Santa doesn't look to have left the building just yet. For the week ahead it will be important today's breakout gaps are maintained and the Nasdaq and Russell 2000 break above their respective 200-day MAs in the next day or two.  Shorts may look to get aggressive in the latter indices if Futures are flat or down.


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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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