Daily Market Commentary: Semiconductors Break

It's not a significant breakdown, but the Semiconductor index broke below wedge support, bringing it back to its 50-day MA. The last major break of the 50-day MA was back in August, when in gapped down to form a significant swing low. Support at 492 is more important than the wedge support lost today, but it does set a continued bearish tone for the Nasdaq and Nasdaq 100.

Taking a lead from the semiconductor index, the Nasdaq reversed early strength, undercutting the 20-day MA in the process.

It was the same story for the Nasdaq 100.

Today's action better sets up shorts for a push to 50-day MAs. Stops on yesterday's high give the trade room, but another push lower would allow stops to go on a close above the 20-day MA.  More aggressive traders could work off the latter stop placement.

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