Thursday, March 21, 2013

Daily Market Commentary: Scrappy Action

Yesterday's small gain was erased with another round of selling, which slightly edged into distribution (in that it was heavier than yesterday's buying, but not really heavy overall). There was no follow through to Wednesday's buying, which was disappointing given the broader strength of the rally.

It left the S&P with a MACD trigger 'sell', and the index just above its 20-day MA. Given bulls failed today, the advantage is handed to bears.  If bears are to play their advantage then there should be a test of the 20-day MA tomorrow.

The Nasdaq is technically weaker than the S&P. There isn't just a 'sell' trigger in the MACD, but in the ADX and On-Balance-Volume too. The 20-day MA is still hanging on as support, but it's getting tight with the narrowing rising wedge. The index looks ready to test the February swing low, if not lower.

The Russell 2000 is hanging on, and is still far enough away from its 20-day MA to suggest there is any strong influence from bears.  However, the tight action of today is a good swing trade opportunity on a break of today's high/lows (stop on flip side).

Bulls failed to show up today, so will bears take advantage? Buyers may be waiting for the 10% correction, but if this doesn't come, what will bulls do? Bulls would probably be happier with a solid sell-off than bears, as it would give them an opportunity to buy-the-dip.


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