Tuesday, December 17, 2013

Daily Market Commentary: Bulls Fight Back

The easier route was for markets to move lower, undercutting support, but buyers mounted an impressive response to last week's selling, doing so on higher volume accumulation.

For the S&P, it looks like the test of the 50-day MA will have to wait a little longer. Although technicals are on course for a net bearish turn, despite Monday's gain. The relative shift to Small Caps, and away from Large Caps continued.

It's a big day for the Russell 2000. Yesterday's 1%+ gain took it back to former resistance. There is still a short play on offer, with technicals net bearish, although a solid move and close into the high 1,120s would quickly kill it.

The Nasdaq got caught in the middle. Shorts are by no means out of it, as morning gains were quickly pegged back and there was no secondary response from them. Technicals are 50:50 bullish/bearish, so no real guide here.

Much of yesterday's volume was likely down to short covering against morning gaps, but buyers failed to appear in the afternoon. Perhaps a new shorting opportunity is available here?  Ironically, strong performing Tech may be the most short-worthy, with the proximity of the Russell 2000 to resistance also offering a relatively low risk short entry. A quick check of Futures shows a probable flat open.


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