Tuesday, January 31, 2012

Daily Market Commentary: Light Losses on Low Volume

It was a mixed day for the indices. Large Cap indices suffered small losses on lighter volume. Tech averages made a small gain on higher volume. Small Caps played closer to Tech action.

The S&P will likely see another pass made on its 20-day MA on Wednesday. The 'sell' trigger in the MACD suggests the 20-day MA will not be support, but while the index is above this moving average it's offering a (somewhat weak) buying opportunity.  Non-MACD technicals remain healthy.

The Nasdaq has been riding a very tight channel.  This won't hold forever, but until breached it's a buy at support and sell at resistance - today's close was at channel support. However, an opening gap down Wednesday would probably play better as a short with a stop above Tuesday's high.

The Russell 2000 is seeing an ever increasing shift in momentum from Small Caps to Tech stocks (see relative strength along the bottom).

For tomorrow, there is a weak 'buy' opportunity at the 20-day MA in the S&P and channel support of the Nasdaq. But should there be an opening gap down in these indices a more aggressive short play (fading the gap fill) may offer better risk:reward.


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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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