Daily Market Commentary: Slow Start to New Year

A modest loss on light volume to start the year was not surprising given the end-of-year gains leading up to 2014. This hangover may see indices come back as far as their 20-day MAs, but there wasn't enough on offer to suggest panic is going to take hold.  Taking profits on gains booked over the last few months remains the most pragmatic approach to adopt until support levels are tested.

The S&P registered a modest 'sell' trigger for On-Balance-Volume.

The Nasdaq is developing a narrow 'flag' near highs. It will soon have former channel resistance to work with as new support.

The Russell 2000 had the largest loss, which continues on a theme of broader rotation out of Small Caps. It finished on breakout support, but looks ready to take further losses.

It will be next week when we will see the theme for Q1 2014 develop.  Until then, play it slow and bank those gains.

If you haven't already, I keep a tumblr of stock picks charts which feed through to my Twitter account (unfortunately, I haven't found a way to route the RSS to my Stocktwits account).

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