Thursday, May 15, 2014

Daily Market Commentary: Bears Press

An unusual day of selling. The Russell 2000, which had been the weakest index, managed to rally into the close. The S&P, which had been the strongest index, attracted only limited buying into the close.

The S&P held to its 50-day MA, which was perhaps the best thing that could be said for today. Volume climbed in confirmed distribution, the first real sign of selling intent since April's sell off,which suggests further selling is likely in the day's ahead.

The Russell 2000 rescued itself from a breakdown, to finish above support. The index finished with a bullish hammer, and with the 200-day MA some 20 points away there is some room for upside over the next few days. Shorts will again be looking at the 20-day MA to attack.

The Nasdaq remained inside its coiling trading range. Volume climbed to register distribution, which is the fourth distribution day since the last accumulation day. Technicals, bar the MACD, are all bearish. With the 50-day MA overhead, and the index struggling to hold the 20-day MA, the likelihood of a bearish breakdown remains high.

Finally, the Dow Jones Index lost its bullish breakout, finishing with a MACD trigger 'sell' but managed to hold on to 50-day MA support.

Tomorrow may see some recovery, but I would be surprised if 'bull traps' in the S&P and Dow were challenged. The Russell is on major support, and the S&P and Dow are on 50-day MAs, all good reasons to be a buyer tomorrow, but don't look to hold the trade for very long.


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