Daily Market Commentary: Stall Day 2
Courtesy of Fallond Stock Picks
It was a roller coaster of a day but in the end markets finished slightly lower. Early action saw challenges on resistance as marked by Monday’s highs, but markets were unable to push their advantage.
The S&P finished with a ‘spinning top’ on heavier volume; volume was enough to generate a sell trigger in on-balance-volume. There is an upcoming ‘golden cross’ between 20-d and 50-d MAs which means the 20-day is going to be the support area on the pullback.
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The Nasdaq touched bases of the 200-day and 50-day MAs. With the declining trendline (former channel resistance) to work with there is a chance we will see buyers make a stronger stand at the convergence of trendline, 20-day and 50-day MAs.
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The Russell 2000 played to form and tested the converged 20-day and 200-day MAs. If the market closes lower tomorrow it would suggest converged MAs will not hold.
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The Dow violated former trading range resistance to take it down to its 200-day MA, but in the end closed the day just a hair above – keeping the breakout intact.
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Semiconductors played off all three moving averages; 20-day, 50-day, and 200-day MAs – finding support at the latter. The sideways trading range is still dominant but if buyers are going to play ball they will need to step up to the plate soon.
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Tomorrow’s interest will focus on Semicondutors, Russell 2000 and the Dow – buyers don’t have much room to maneuver if they are to defend key moving averages in these indices. A weak close tomorrow – even one which held these moving averages – would be an omen for worse to come.
