Daily Market Commentary: Low Volume Stall

Bulls didn't want to offer bears any confidence and Friday's low volume (small) gain was enough to keep them away. Optimist bulls could say Friday finished with bullish inside days/bullish doji - but such patterns only have merit in oversold markets, and this is not an oversold market. However, there are plenty of long term bulls (me included) who have limited skin in the game and are looking at opportunities to get in. I'm waiting for a 10% discount on the 200-day MA, but others won't be so patient and may look to nibble on Monday.

For the S&P, the 20-day MA is fast approaching the market even if the S&P is dawdling down to the MA. The S&P may kick on once the 20-day MA is tested.

The Nasdaq finished with the 'bullish doji', but as I said before the overbought state of the market negates the reversal element (although others may argue because the market is overbought it intensifies it). Either way, buyers could set a stop on a loss of Thursday's low and have a reasonably good trade.

The Russell 2000 is another bullish doji, and the bull flag is shaping up nicely: buy a break of the flag, stop on a loss of the doji low.

As a final point, while the semiconductor index negated the tri-star reversal, it's trying again with another 'shooting star'. Nothing confirmed until it undercuts the low with a bearish candle.

Monday will probably side with bulls, but most of the gains may be delivered with a gap open.

Back to the World Cut, have an accumulator bet with England as winners (as per Nate Silver).  Spain disappointed the bet in an entertaining game, so it's a question of getting back what I can.  After the Uruguay defeat to Costa Rica I suspect tonight's match will finish with a draw.  Good World Cup so far...

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