Tuesday, March 06, 2012

Daily Market Commentary: Sellers Press Advantage

Market losses fell into the 1-2% range; Small Caps suffering more than Large Caps or Tech Indices. On charts, todays' losses looked worse than might have otherwise been considered given the 'baby-step' rallies. Volume climbed to register a distribution day, but overall volume was relatively light - so Tuesday's selling was not a rush to the exits. However, concerns remain.

Hardest hit was the Russell 2000. Selling took the index below its 50-day MA, leaving 764 then the 200-day MA as the next targets for support. Technicals are set to turn net bearish over the next few days which may dissuade traders from buying.

The Nasdaq gapped below its 20-day MA, leaving the index in a void between 20-day and 50-day MAs. Wednesday morning trading may see this gap close, but look for shorts to get aggressive at the 20-day MA.

The S&P suffered a clear channel break, following the lead of Small Caps and recently Tech in losing such support.  Tuesday's selling took the index below its 20-day MA, leaving the 50-day MA as the next support target.

Wednesday will give an indication as to how active Shorts are in this market; 20-day MAs will be attacked, so will bulls be able to force them to cover? New rally highs will be necessary to get them to do that.


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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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