Tuesday, October 16, 2012

Daily Market Commentary: Decent Follow Through

The indices are attempting swing lows, with the Russell 2000, Nasdaq 100 and S&P offering the clearest support levels off which to work. Stops can be set below yesterday's lows, and a move to - and above - September's highs as targets.

Gains in the S&P also resulted in bullish crosses for On-Balance-Volume and the Directional Movement System.

The Nasdaq was working from a position below its 50-day MA, and the past two days have seen the index rally back to its 50-day MA. Volume climbed to register an accumulation day, a strong positive, and a better indicator the 50-day MA will hold as support.

The Russell 2000 is coming up against its 20-day MA, but has at least managed to hold what was looking like last gasp support at 820.

If bears are going to make a move, it will likely come against the Nasdaq 100.  The index rallied well on higher volume, but fell shy of its 50-day MA.  The 20-day MA is also falling sharply and is a day or two away from a 'Death Cross' to the 50-day MA. Technicals remain net bearish.

Will bears make an appearance tomorrow? Moving Averages will be the first sign of resistance, but beyond that its September swing highs.  It will be important to see how breadth reacts to this rally, will fewer stocks outperform their averages? This will be clearer by end of week.


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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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