Daily Market Commentary: Semiconductors Struggling

It was a bit of blitz on technology indices and semiconductors as sellers swept the day.  Large Caps escaped largely unscathed, although there was still enough damage to see a breakdown in the bear flag.

The semiconductors are in the most trouble. Today's losses undercut the prior swing low.  With the index trading below all key moving averages (20-day, 50-day, and 200-day MA), it looks like things are going to get worse before they get better.

The Nasdaq 100 sliced clean through its 50-day MA, and is looking at trendline support.  If this fails to hold it's the 200-day MA next.  Given action in the semiconductor index, it's looking more likely the index will drop to its 200-day MA.  The Nasdaq 100 was the first of the key indices to turn net bearish technically.

There was also a break in the Nasdaq. The loss undercut the channel support line too, with next support its 200-day MA.  Unlike the Nasdaq 100, there was no net bearish turn in technicals - although it's getting close.

The S&P likewise experienced a breakdown, but is above its 50-day MA and channel support, and has the strongest technicals of all the indices. Note how relative strength is improving relative to Small Caps indices.

Small Caps also experienced a big drop, but finished just shy of its 50-day MA. Technicals are not as weak as for Tech indices, and there is a possibility the 50-day MA will play as support tomorrow. Best chance for a short term long trade.

A bounce tomorrow?


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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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