Daily Market Commentary: Rally Continues

Another day to leave excluded bulls wishing they had bought last week. Tomorrow will offer opportunities for bears to take advantage, but not all indices are in the same shape.

The S&P is one such index which will find itself under the influence of bears on Friday. Today's rally took the index up to its 20-day MA, which just 'Death Crossed' below the 50-day MA. Near term momentum is with bulls, but if there is going to be a change then tomorrow is a good chance for shorts to show their hand.

The Nasdaq is on the verge of turning net bullish (technically) with the path of least resistance to 4,485. It has perhaps the 'easiest' path to further gains.

The Russell 2000 has more of a struggle on its hands but if it can clear 200-day and 50-day MAs it will attract value players reluctant to chase the Nasdaq, or Nasdaq 100 higher. I liked today's action - tight coiling will spring a reaction.  Despite the presence of nearby resistance at the 200-day MA, supporting technicals suggest this reaction will be higher.

For Friday, look for bullish moves in the Nasdaq and Russell 2000. Shorts should watch morning action in the S&P for opportunity.


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