Weekly Market Commentary: Rejection of S&P Highs

Friday was set up for bulls, but in the end they couldn't maintain the push. The S&P experienced the largest swing as it posted at a new high from the open, but rejected an attempted a follow through near midday. From there on it was down all the way. Volume climbed to register as significant distribution, although the bulk of the volume came on morning buying (which is now trapped from the latter selling).  This kind of reversal can get ugly quick. Not a time to buy, an aggressive short with a stop above 1,884.

The Nasdaq finished with a bearish engulfing pattern; the failed upside breakout turning southwards on higher volume selling. Next week is set up for a test of the 50-day MA.

The Russell 2000 had a relative low key day. It didn't succeed in posting a high, but instead is getting steadily squeezed by resistance and 20-day MA. While it looks likely it will break lower, it's the index which could give bulls something to play with on Monday.

The one index which has pulled away from the pack is the semiconductor index. Unlike many of the indices it has had a very strong start to 2014 - this can only help the Nasdaq and Nasdaq 100 in the weeks and months ahead.

Monday is a profit taker's market, not something to be buying for the long term. It has been a whipsaw time for the market, although Friday gave an indication bears might be able to generate something which can last long than a day.

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