Daily Market Commentary: Coiling

An afternoon sell off took the gloss on what had been a decent holding pattern for bulls.  The selling wasn't enough to undercut yesterday's low. This tightening of price action typically unwinds into a strong move; the direction of the move will be decided by the break of the high/low at the apex of the coil - which for now is Thursday's high/low. Selling volume was relatively light which further suggests a consolidation.

The S&P is holding its 20-day MA with technicals improving. Buyers will want the May reaction high to break if they are to go long with confidence.

The Nasdaq made another run to channel resistance before reversing; it too is holding its 20-day MA. While it does it offers bulls a long side opportunity with a stop on a break of the 20-day MA.

The Russell 2000 is in the most trouble. The selling left it stuck below its 200-day MA and looking to the June swing low as next support. However, technicals continue to improve despite the selling.

Given yesterday's lows held it's still a buyers play.  Improving technicals would appear to support a buyers thesis for those willing to be brave.


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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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