Daily Market Commentary:Technology Boom

The semiconductor index ultimately offered a peek into what happened today. Following on the heels of yesterday's Semi breakout were breakouts in the Nasdaq and Nasdaq 100.  The Nasdaq breakout was supported by higher volume, no doubt driven by short covering. Technicals turned net bullish, ending January's bearish turn, and returning the market to its upward looking bias.

The breakout in the Nasdaq 100 was just as convincing, with additional support coming from the strong relative turn against the Russell 2000. The February 'bear trap' was a nice opportunity for those who took advantage.

The leading Semiconductor Index didn't disappoint. It built on yesterday's break by adding just over 1%.

The S&P opened weak, but came back to close at a new high for the February rally. It's still a few days from posting new highs like the Tech averages. However, technicals did turn net bullish, meaning declines should be bought (up until Technicals turn net bearish).

Finally, the Russell 2000 rallied through converged resistance, bringing itself inside the former bullish channel. Technicals also returned net bullish, meaning it too is a time to buy pullbacks.

Friday may see some quiet action as today's breakouts are digested. Technology stocks and indices are doing the driving, but for this rally to persist it will need the participation of the Russell 2000. Today was a good start for the latter index, but it will need more days like today to bring more buyers in.


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