Daily Market Commentary: Sellers Edge It

Yesterday's highs remain the risk metric for new short positions. Bulls were unable to maintain their late morning advance after opening gaps down across the indices. Until such highs are broken, the near term short position remains favoured.

The S&P saw increased volume in confirmed distribution.  It was accompanied with a 'sell' trigger in On-Balance-Volume.  In the near term, there is an upcoming convergence between declining resistance and rising support of the channel.  Channel support is also aided by the 50-day MA. Support should be stronger, but take nothing for granted!

The Nasdaq also has a rising support level to work with.  Wednesday may be the day this support is tested. Technicals, with the exception of the MACD, remain bullish.  Selling volume was also higher, but it wasn't enough to trigger a 'sell' for On-Balance-Volume.

If shorts are able to push through rising support, then the 50-day MA is next (and a good place to take profits from near term short positions).

The Russell 2000 has the most room to run to support. Horizontal support near 954, and/or 50-day MA currently at 957, are downward targets for short players.  Technicals are weaker than they are for the Nasdaq.

Tomorrow should see preliminary tests of supports. Partial profits on today's short positions may be taken, but some follow through lower over the coming days is likely.


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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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