Daily Market Commentary: Early Gains Rebuffed

A promising start gave way to selling, but at least the lows of last week held.  Large Caps suffered the worst of the action and the Dow is doing its best to break support, despite the higher volume accumulation.  The 200-day MA is looking a natural downside target for the Dow.

The S&P hasn't yet tested support, but as with the Dow the action looks bearish.

The Nasdaq still has the 50-day MA to lean against but is bound by 20-day MA resistance. It's somewhat protected by the weakness in Large Cap indices, although not immune...

 The Russell 2000 is lurking near channel support, although the 20-day MA is also nearby as resistance.

It's decision time for the markets: 20-day MAs are offering supply problems and assisting shorts, while channel support is available for longs as (relatively) low risk buying opportunities. I suspect bears have control in the short term, but my sectorbreadth studies indicate a strong, tradeable swing low is only a few days of selling away.


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