Daily Market Commentary: Stall Out

It took a couple of days longer than expected, but the rally started from the swing low finally hit a stumbling block. Market ranges were narrow, and the gains or losses minor, which is more likely to help bulls as indices work new challenges of recent highs.

Swing trades can look to trade a break of the day's high/lows, with a stop on the flip side.  But momentum is with the bulls, so any short-side break could be short-lived.

Technicals for the S&P are net bullish, and will likely remain so for the next few days even if sellers returns.

The Nasdaq is closest to posting a new high for the rally. If it can mange this, then look for other indices - like the S&P - to follow suit. Bulls probably have most to play for in this index.

Helping the bulls will be the breakout in the Semiconductor Index. The breakout should help drive the rally in the Nasdaq and Nasdaq 100. Action in the semiconductor index will be significant since breaking out of its base in December it has accelerated higher as other indices slowed. It will be a bellwether for the next few weeks.

The Russell 2000 has fallen off the radar since underperforming from October. The 'bull trap' in January has really knocked the confidence out of bulls and killed the appetite for speculative equities. Today's inverse hammer at the convergence of the 20-day and 50-day MA "death cross" looks an ideal 'short' play.

For Thursday, bulls can look to Tech indices to continue their rally, but bears will likely find more joy from the Russell 2000.


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