Thursday, January 26, 2012

Daily Market Commentary: Sellers Make First Appearance in S&P for 2012

Today was the first distribution day for the year in the S&P and the second for the Nasdaq.  Despite the selling there was little change on the nature of the rally. A sequence of selling would obviously change this, but today offered little more than profit taking.

Selling in the S&P retraced some, but not all of yesterday's gains. If this is the start of a longer decline then the 20-day MA is the likely support area for buyers to make their next appearance.

The Nasdaq is in the same position, although there is a support level at 2,737 which may play as an alternative for buyers to step in.

The Russell 2000 also has the benefit of the 20-day MA which has converged with 764 support to help buyers.

The extent of today's selling volume is likely to see some follow through tomorrow. Not until 20-day MAs are tested will the integrity of the rally be known.


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