Daily Market Commentary: Buyers Return At Support

The S&P played to form with buyers coming in at converged support and 50-day MA. There was even a morning sell off and recovery for those nimble enough to take advantage. The intraday picture is nicely set up for an upside breakout.  Short term (long) traders might want to take partial profits at 20-day MA, but a larger push to sideways resistance around 1,880 is not out of the question. Risk measured on a close below today's lows.

The Nasdaq recovered yesterday's losses, and enough to trigger a possible 'bear trap' from a redrawn channel.  Measure risk on loss of 4,052.

The 'bear trap' in the Russell 2000 is also a longside opportunity. Play for a move to hashed-line channel resistance. Technicals are not oversold, which may lead to a secondary push lower - so a long trade needs a stop.

For Wednesday, hold for further upside, using Monday's lows as an area for stops. A break of Monday's lows would not make for a great short-side play as the potential for whipsaw would be high. But the 200-day MA is an alternative downside target; assess risk:reward accordingly (today's highs as a stop for short-side positions???)

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