Weekly Market Commentary: Bears Keep Up The Pressure

It has been a while since bulls haven't been able to mount a counter attack to a big one day loss as was experienced on Thursday. Some indices are significantly worse off than others, but bulls do have some defensive opportunities to play on Monday.

The S&P finished the week at its 50-day MA. Technicals are growing increasingly bearish, but are a long way from oversold, so the next bounce will likely be short and probably find resistance at the 20-day MA.

Weekly S&P breadth remains high with 81% of stocks holding point-n-figure 'Buy' signals.

The Dow experienced a more concerted sell off. It's trading below its 20-day and 50-day MAs.  It's making a run to the lower channel line and looks set to get there by end-of-week.

The Russell 2000 closed the week with a 'bull trap' having fallen back inside its former channel. Bears and bulls could get something out of this: lots of downside to channel support (currently around 905), but if this was held then bulls would maintain the broader momentum; i.e. a good buying opportunity.

Nasdaq had looked like it was inching a channel breakout, but has weakened to keep itself inside it. Weekly technicals remain bullish.

Bears are likely to keep the pressure on for the rest of the week. If bulls do step up then I would want to see what they could achieve at 20-day MA resistance; shorts are likely to be active around here. Still a good time to take profits if holding.

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