Tuesday, July 29, 2014

Daily Market Commentary: Bears Return

The day started well (for bulls) with some early follow through upside, but it wasn't long until bears were trying their hand again.

The S&P may have registered a channel breakdown. There was a close below channel support, although the day's low did not violate the low from yesterday. There was a marked rise in volume, confirming distribution.

There was also a distribution day for the Nasdaq, but there was no support violation.  The index continues to edge a relative advantage over the S&P, and maintains support of its 50-day MA. Bulls still have the edge here.

The Russell 2000 edged a higher close, but the retracement of early gains suggests the retest of the 1,131 swing low isn't done yet. However, it's near enough to the 200-day MA to suggest there is still support available, and buyers may still get a low risk bargain - although one solid sell off day would probably be enough to kill the long play.

The odd index out was the Nasdaq 100: minor losses on low volume, with room to nearest support at the 20-day MA. Nothing bearish here.

Bulls may still be able to hold their nose and buy here, but you wouldn't want to hold for long if sellers were to push markets down at least 1%, particularly for the S&P as it would confirm the channel breakdown.


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