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Semiconductor's (Very Modest) Breakout Phase I

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There wasn't much on offer by the close of business as early losses were returned by the close. The Semiconductor Index may have had the best of the action, although the relative gain was small. The index crept over declining resistance, but has another resistance level to challenge soon. Support at 659 remains in play, but if it breaks it becomes a shorting opportunity.

Big Gains on Modest Volume

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After the sequence of selling, it was no surprise to see Bulls make a comeback. Friday's volume was relatively light compared to the day's gains, but some indices are well positioned for a further advance. Best of which is possibly the Semiconductor Index. The index rallied from converged trendline and breakout support. Buyers can use Friday's low as the risk level for a bounce. There are a few declining trendlines to break, but if these go then a retest of 704 is next; first trendline will see a test on Monday's open.

Neckline Breakdown in S&P

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Selling returned for another day as the rising neckline connecting December and January swing lows in the S&P broke lower. Volume climbed to register a distribution day, continuing a sequence of increased volume selling. The December swing low is the next level of support and is looking like a required test.

Decent Afternoon Recovery in S&P

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It was looking tough for a while, but markets managed to claw back early afternoon losses. Bulls will be happy to see late afternoon buying which has the chance to follow through on Thursday morning (or premarket). The S&P returned to neckline support, although troubles are likely to re-emerge when it gets back to 2,064. It's not a particularly attractive long here, but shorts will have been repelled for a while. There is chance of a double bottom, which will require a break of the 2,060 neckline to confirm. Note that any such break would also negate the bearish head-and-shoulder reversal

Wild Ride...But No Winner

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Markets went one way, then the other, but in the end it was only a small loss. Volume climbed to register a distribution day, and technicals for indices gave up whatever residual bullishness there was, but price support remains in play. The S&P tagged the rising trendline, but finished below the 20-day MA. The wide range day makes it more difficult to offer guidance for tomorrow, although edging towards the bear side is probably the more likely outcome - but given the events of today, anything is possible!

Selling Continues

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The bearish head-and-shoulder pattern for Large Cap indices continued to remain in play after Monday's action. The 50-day MA is no longer support for the S&P as the angled neckline next comes into play. Angled necklines do not make for reliable head-and-shoulder patterns, so caution is advised.

Head-and-Shoulder (Bearish) Reversal Risk

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Friday's selling raises the possibility of a head-and-shoulder reversal in the S&P and Dow. Shorts are likely to use Friday's high to measure risk for such a possibility. Bulls can look to Friday's low volume as a measure of weak bullish strength, and the successful defense of the 50-day MA. A move to angled neckline support looks likely for the coming week.

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