Daily Market Commentary: Low Volume Recovery

Big gains, but modest volume. The battle is on to decide whether yesterday's action marked a swing low, or if markets are in the process of shaping a top. Technicals and breadth indices suggest this is a top and the current bounce is nothing more than a relief move. But, a new all-time high will have to be respected, despite what technicals may otherwise suggest. But we are not there yet.

The S&P didn't make it as far as its 50-day MA before bouncing.  The 'sell' in the ADX was reversed.


The Nasdaq did stage a bounce off its 50-day MA. This is looking more like a traditional play off support than it is for any other index.  Given that, the rally in the Nasdaq could last longer.


The Russell 2000 will be the most interesting.  The break of rising support will soon encounter resistance from the former support trendline (now resistance). Relative shift is turning away from speculative Small Caps, which is a bearish development.


Tomorrow could see further upside as the relief bounce plays out.  The bounce will remain 'relief' as long as trading volume remains light.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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