Saturday, November 17, 2012

Weekly Market Commentary: Breadth Still Not At Low

Despite adding to existing longs of my investment holdings (my trading account is decimated!), it's still looking a little early for a breadth swing low.  However, I didn't want to get caught on the wrong side of a 'Santa Rally' (should it come), so thought Friday was a good day to add to longs.

The Percentage of Nasdaq Stocks has dipped into swing low territory, but it's typically the first breadth indicator to reach a bottom.

But the Nasdaq Bullish Percents are still some way off. Technicals are not oversold either. Strong swing lows  come in the sub-30% area, with minor swing lows possible in the current range.

The Nasdaq Summation Index is getting close, but technicals are still some way from a bottom. I usually look for swing lows from -800 and lower, but it's conceivable a bottom could develop here.

The Nasdaq is trading inside a band of support running between 2,800 and 2,865.  The rising trendline of wedge support is also available on the low end of the aforementioned range.  Technicals suggest 2,800 won't be a swing low, but price action will always trump technical action.

The Russell 2000 confirmed a breakdown of trendline support. Technicals are a long way from oversold, which is somewhat worrying; 745 support may not be enough.

The S&P followed the Russell 2000 by breaking trendline support. Technicals are only in the early phase turning sour, it may be necessary to watch the Russell 2000 for leads in the S&P.

Will Santa make an early call? Should a swing low emerge it will not be a major one, but it will be a tradable one.


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Dr. Declan Fallon is the Senior Market Technician and Community Director for 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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