Daily Market Commentary: Supply Emerges

The history books will show another higher close for the S&P, but today was the first day in a while sellers were able to exert some influence. Other indices didn't fare so well, all finishing lower. Small Caps suffered the heaviest selling, finishing the day with a bearish engulfing pattern.

The S&P looks like it's about to offer a couple days of weakness, but there should be support at the 20-day MA, if not the 50-day MA.  Watch action at these two levels.

The Russell 2000 had enjoyed the strongest advance (as measured by relative strength against the S&P) since mid-November, but this strength has also left it most exposed to potential sellers. The 50-day MA is a logical support level.  There is also a 'Golden Cross' between 200-day an 20-day MAs to look too.

The Nasdaq was caught in the middle of the two extremes of Small and Large Caps. It has the 50-day MA as nearest support, with the 200-day MA next up.

The key for all of these indices is that the swing low holds at support. This keeps the Santa Rally intact.  The good news is that all key moving averages are running above such lows.  Watch the next few days with interest.


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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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