Daily Market Commentary: Semiconductors Gain Traction

A solid if somewhat low key day. Indices look to be building a swing low with a decent pick up in volume to register an accumulation day.  Best of the days action was in the semiconductor index as it confirms channel support.

The semiconductor index also saw a close above the 50-day MA with the 20-day MA in sights for Wednesday. Technicals have a bearish bias, but the bullish price trend trumps this negativity. This is also good news for the Nasdaq and Nasdaq 100, which should see some follow through upside.

The Nasdaq is set to challenge the 'bull trap' having managed to keep above its 20-day MA. The MACD trigger 'sell' is likely to reverse in the next couple of days, which will turn technicals net bullish once more.

The S&P was not to be left out. It managed a close above its 20-day MA, although it has some more work to do to reverse its MACD trigger 'sell' (and negate the growing bearish divergence in this indicator). Long side positions still favored though.

The Russell 2000 was the only index to close down (slightly). This continued a lengthening relative shift away from speculative issues. It's perhaps the only negative sign on what was a positive day for the markets.  If the market is to crack, it will be the Russell 2000 to lead it down: this is the canary in the mineshaft.

For Wednesday, look for more of the same: holiday volumes with an upside bias.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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