Daily Market Commentary: Low Volume Consolidation

It was going to be hard for bulls to push another day like yesterday, so a consolidation near yesterday's highs was adequate compensation.

The S&P almost scrapped a point gain, but the 20-day MA took another step lower to meet it. Technicals improved, although On-Balance-Volume is experiencing whipsaw.

The Nasdaq experienced a similar day to the S&P.  Technicals are also improving; a MACD and On-Balance-Volume 'buy' trigger are likely tomorrow - assuming no major loss. Such a 'buy' would not preclude a retest of the low, but it would suggest a more trade-worthy low is in place (and the retest would be a buying opportunity).

The Russell 2000 completed the trifecta index gain, but technically it's not as well placed as the other indices, and is underperforming relative to the Nasdaq and S&P.

Tomorrow could see more of the same, with 20-day MAs overhead to provide resistance.  The retest would be welcome as it would help firm up the swing low.  My chief concern was the sell off didn't meet my qualifying 10% move from the S&P 200-day MA, although I did add to my investment positions during the sell off.


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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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