It has been a while since markets experienced a significant distribution day, but today was one such day. Luckily the heavier volume selling wasn't accompanied with a big point loss, and prices remained inside tight rising channels for many of the key indices. But there was an exception.  The Russell 2000 is the index under the most selling pressure and today's action didn't help.  Small Cap selling saw a loss of the 20-day MA with additional pressure on range support. The net result is a significant dent in buyers' confidence.  Should losses continue tomorrow (leading to a confirmed break of the February trading range) the next support level is the 50-day MA down at 786. Note the expansion in relative weakness to Tech ...and Large Cap sectors The Nasdaq is looking vulnerable, but it has the benefit of expanding relative strength and robust technical health. So while a second day of selling may see channel support broken, it may have enough to attract buyers

Indices continued their march higher. The semiconductor index was the day's chief winner with a gain of 1.5% The advance in the Semiconductor index passed through to the Nasdaq and Nasdaq 100, with a lesser gain for the S&P and Dow, but a small loss for the Russell 2000. The semiconductor index had lost support from its 'Santa Rally', but was able to defend its 20-day MA. Today's rally was part of the 20-day MA defense. Whether the February swing low becomes part of a new rising channel won't be confirmed until 438 is breached. The Nasdaq and Nasdaq 100 were chief beneficiaries of the gain in the semiconductor index. The Nasdaq 100 is riding along channel support helped by higher volume accumulation. Along with the Nasdaq The S&P posted a smaller gain than was seen in the Nasdaq without the higher volume accumulation. Relative strength continued to swing from Small Caps to Large Caps. Helped by today's loss in the Russell 2000.  Not

Markets finished strong after a weak start. Volume rose to register an accumulation day, although overall volume was not particularly heavy. The rally keeps chugging along. The S&P continued to make relative strength gains against the Russell 2000. This is good news for defensive Large Caps, but it may be a growing worry for Small Caps. It's a modest shift and not enough to turn the broader trend in favour of safe sector Large Cap stocks, but should this continue it could signal the end of the broader rally. In morning trading the Nasdaq was trading outside of its channel, but afternoon buying was able to bring the index back inside its channel. The MACD trigger 'sell' remains in play.  With the index trading inside its channel (and at channel support) the favored outcome is for higher prices. The Russell 2000 finished down slightly, but the index is range bound in a sideways channel. No reason to get excited, although the range bound trading means relative

Indices were able to finish the week at or near the highs. The index which is most likely to benefit next week is the Russell 2000.  Whereas Tech has already broken to new highs and Large Caps are on the verge of doing so, it's the Russell 2000 which is set up for a breakout and offers room to next resistance.  The challenge remains 830, but a close above this level will leave another 35 points of room until resistance is encountered. The Nasdaq has no overhead supply, but the gradual weakening of market breadth limited last week's gain to under one percent. The Nasdaq Summation Index was the breadth indicator to give up the most (albeit a small loss). The S&P is just 5 points away from 2011 highs. From there it will go on to challenge the 2007 high, but it might be slow going given Small Caps and Tech will tempt buyers from positions of new multi-year highs. Next week looks set for a further expansion in breadth weakness which may result in a more subst

Small gains on a slight uptick in volume helped bulls defend support.  Both the Nasdaq and Nasdaq 100 maintained their advance within the boundaries of their channels  The S&P edged higher, undoing yesterday's losses. While the semiconductor and Russell 2000 dug in at their respective 20-day MAs, but neither could undo the earlier trendline breaks. There was a swing towards Small Caps from Large Caps; although there is a broader shift to Large Cap stocks dating back to the start of February. The Nasdaq added almost a 1%, but the gain wasn't enough to reverse the MACD trigger 'sell' for the index. While the semiconductor index recovered from an intraday loss of its 20-day MA to finish the day just above it. However, technical weakness continues to expand, so it's likely this defense of the 20-day MA won't build into a lasting rally. The Russell 2000 posted the largest one-day gain.  The index is developing a sideways consolidation with clear

Indices suffering most from recent selling took the hardest hit today.  The Russell 2000 finished just above the 20-day MA as the index pushed sideways. The Nasdaq took the next largest hit on the day and was left with an upcoming 'sell' trigger in on-balance-volume. Channel support is key; can the rally continue and defend this support? The Nasdaq 100 was likewise hit. Today saw a MACD trigger 'sell' - the first technical indicator to take a turn for this index. However, relative strength continues to improve.  This favors a bullish defense of channel support. Although the semiconductor index confirmed the break of the rising trend, it held on to the 20-day MA. Relative strength has shifted away from this key economic bell weather to other Tech stocks, although this relationship is still in whipsaw territory and has yet to establish a new trend. Tomorrow is a question for channel-support buying in the Nasdaq and Nasdaq 100. If it's to occur it w

Where Large Caps and Tech were relatively unchanged by the close, it was left to Small Caps and Semiconductors to fire the warning shots. Action in the Russell 2000 was the most worrisome.  Tuesday's loss didn't quite reach the 1% mark, but it did confirm the channel breakdown (and removing what had looked to have been a 'bear trap').  The 20-day MA is the next point of support; a second down day here will see this MA tested. The semiconductor index was one of the harder hit sectors. Tuesday's loss is the second sizable loss for this index in a row.  It has come close to a confirmed break of the December 2011-February 2012 trend, although I would give this a little more leeway. Technicals remain bearish. Should early weakness in semiconductors expand into a broader decline, then expect this selling to spread to the Nasdaq and Nasdaq 100. For Wednesday, watch the two aforementioned indices closely.  What happens here will have significant impacts on Tech

After weeks of steady gains, advances in market breadth slowed or reversed. The majority of market breadth indicators are overbought, although some - like the Bullish Percents - still offer room for upside.  Meanwhile parent indices managed to close last week with gains. Swing highs in market breadth often lead swing highs in parent indices, although sharp declines in indices usually occur after a successive series of lower highs and lower lows in market breadth. In the current situation we are probably looking at just the start of such event. A case in point is the Nasdaq Bullish Percents.  The Percentage of Nasdaq Stocks above the 50-day MA has topped out at around 80%.  The last time this breadth indicator topped above 80% was in early 2009.  Back then, the resulting reversal in the parent Nasdaq was barely a blip in its broader advance - it wasn't until 2010 that the Nasdaq rolled over in force. The Nasdaq Bullish Percents haven't reached the rarefied heights of 2009

After yesterday's sell off it was looking easier for bears to push their advantage than for bulls to recover. But in the end, it was bulls which came out tops. Semiconductors had the best of the day's trading. The rally has resulted in a new realignment for the bullish trend and reversed a bearish turn in the CCI.  However, the MACD 'sell' trigger remains. Small Caps also performed well, reversing the breakdown and creating a potential 'bear trap' of shorts. Another 4 points worth of gains will see a new high for the index. Tech indices benefited from the buying in the semiconductor index, preventing what was looking like a channel breakdown.  The MACD trigger 'sell' was also negated. But the S&P wasn't quite so lucky, although the level of buying was lighter than in the Nasdaq or Russell 2000. It's getting harder for indices to attract new investors. Today's buying was on the back of lighter volume, a sign of tiredn

Small Caps had been the weakest index the past couple of days and this under performance came back to haunt the index as rising trendline support was knocked out. Other indices were holding up reasonably well in the morning, but afternoon trading quickly saw sellers take control. The breakdown in the Russell 2000 is clear to see. The good news for bulls is the close proximity of support at the 20-day MA. Next hardest hit by selling were the Tech averages. The Nasdaq suffered a bearish engulfing pattern on higher volume selling (distribution). The selling was accompanied by a MACD trigger 'sell', although the rising bull channel was not broken. The Nasdaq 100 suffered a similar bearish swing, but didn't suffer a MACD trigger 'sell' Fueling Tech weakness has been indecision in the semiconductor index, although the selling was not as bad as experienced in the Nasdaq and Nasdaq 100. Large Caps were one sector to escape relatively unscathed from tod

It was set up to be a down day for the markets before an 11th hour surge pushed the Nasdaq and Nasdaq 100 into positive territory and clawed back nearly all of Large Cap losses.  Only the Russell 2000 was somewhat immune to this buying. The S&P didn't escape totally unscathed. While the index finished less than a couple of points lower, it was unable to prevent a MACD trigger 'sell' or see a confirmed distribution day (although this is really not as bad as it could have been given the small point loss). The Nasdaq fared better.  Today's gain - while small too - registered as heavier volume as accumulation.  And unlike the S&P, retained its technical health. If there is a skeleton in the closet it's the semiconductor index. Rising trendline support was broken a couple of days ago and while the 20-day MA was successfully defended it may contribute selling pressure to the Nasdaq. But while the semiconductors may put the kibosh on the Nasdaq, it

Markets comfortably recovered Friday's losses, doing enough to finish above Friday's start points. Bullish price channels held for another day, taking indices closer to resistance than support, although buying volume eased. It wasn't all fun and games. The Russell 2000 was able to rally off channel support, but was unable to prevent bearish turns in its CCI and MACD.  Relative strength continued to move away from Small Caps to Tech averages - a weakening of overall bullish market conditions - but not enough to break the market. However, this early weakness suggest channel support is likely to break before the index posts new highs. The Nasdaq remains the best placed index to attract buyers. Technicals are bullish with relative strength expanding for Techs over Large (and Small) Caps. The S&P is caught in the middle of the Small Caps vs Tech debate. Technicals are bullish, but a MACD trigger 'sell' is likely to occur in this index of the coming days.

It had to happen at some point, but last week was the first of 2012 to see markets close lower - at least for the Russell 2000.  Large Caps and Tech finished the week flat, but in the case of Nasdaq breadth, it was another week of gains. The Nasdaq Bullish Percents added another couple of points - but has room to travel to resistance. While the Summation Index is very close to all-time highs (and is doing a very good impression of the rally from the March 2009 low). These gains in breadth were enough to keep the Nasdaq flat on the week (on lower volume) Compared to the 2% loss in the Russell 2000 But there was also a flat close for the S&P on the week, also on light volume. Given the length of the rally, last week's losses on light volume were welcome. So a few more weeks like last will nicely set up the next phase of the rally.  But with market breadth close too - if not already - at a point where an extended period of downside is favoured, discretio