Daily Market Commentary: Selling Day 2

In the end, 20-day MAs didn't prove to offer too much of a defense from sellers. Volume climbed in confirmed distribution as profit taking ruled the day's action. Next in line are 50-day MAs.  These should offer a more substantial defense.

The move to selling has coincided with a relative shift away from speculative Small Caps to defensive Large Caps.

The Nasdaq is likely to be the first index to test the 50-day MA. It was unusual to see today's biggest loss attributed to the Nasdaq given its more modest ascent. But action here will be a good proxy for the Russell 2000 and S&P. Friday may give the first indication of future expectations

The driver for the selling in the Nasdaq was the steep losses in the semiconductor index. It's heading to the 50-day MA, and likely down to the rising channel.

The Russell 2000 cracked its 20-day MA and is staring down at its 50-day MA.  Given the distance between the respective MAs, there may be short trade on the move; look to attack a bounce to the 20-day MA.

For Friday, shorts will be looking to attack any bounce back to 20-day MAs. 50-day MAs are downward targets.


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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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