Daily Market Commentary: Will Late Recovery Be Enough?

It took a while for markets to stage a recovery today but its questionable if it will be enough to offer buyers the confidence to come in. Europe looks to be back to square one and this time the outcome could be worse; how much of this uncertainty has been priced in remains to be seen, but markets are probably still too rich for most people (had this news hit after a more protracted decline it might have offered the washout to complete the bottom).

The Nasdaq is clinging on to backtest support, but for a while it hadn't offered any help.  Volume soared to register a significant distribution. Today's low is the marker for stop placement.

The Russell 2000 was able to defend wedge support, but the wedge will soon resolve as it narrows into an apex; it plays as a long on today's close (stop on break of today's low).

The Dow lost trendline support, but with additional support at 12,700 there is a strong chance it will become range bound in the 12,700 - 13,250 range.

Finally, the semiconductor index was the first of the key indices to test and successfully defend its 200-day MA.  A short term bounce to the 20-day MA looks to be the immediate play on offer.

It's going to be hard to be a buyer in the face of every twist and turn in Europe. The brave will attempt to play support but buyers won't be holding if the trade turns quickly against them (such as a break of today's lows).


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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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