Fallond Stock Picks

Daily Market Commentary: Watch for Bull Traps

noreply@blogger.com (Declan Fallon) — Thu, 20 Jun 2013 03:43:57 PDT

The Fed induced sell off undid the gains generated by bulls yesterday, but the selling wasn't enough to write off the breakouts altogether. However, another day of selling tomorrow will lead to breakout failure, trapping those buyers. Bulls aren't totally out of the picture - the breakouts haven't failed, and indices are closer to support. Buying at the open with a tight stop could be an interesting day trade: the S&P illustrates the long side potential with a stop on a break of the 50-day MA which is also channel support.

The Nasdaq offers a similar opportunity as the S&P: technicals are a little more bullish, plus, it's outperforming the S&P in relative terms.

The Russell 2000 is outperforming the Nasdaq, although it's a little more vulnerable when it comes to placing a protective stop. There is no obvious channel support, and the 50-day MA is a distance away.

The likelihood is for selling to continue, but the nimble may be able to steal a quick long trade if there is any hesitation on the part of bulls. Remember, breadth metrics are overbought and side with bears, but the broader trend is bullish, and the trend won't disappear without a fight - a fight which has an obvious starting point tomorrow.

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Daily Market Commentary: Low Volume Breakouts

noreply@blogger.com (Declan Fallon) — Wed, 19 Jun 2013 01:56:57 PDT

In the run up to today's Fed announcement, markets made an early break past resistance - following the S&P's lead, which made its break on Monday.

The semiconductor index posted the most significant move, as it was able to close at a new multi-year high. The gain was enough to reverse the bearish cross is +DI/-DI (although with a weakening ADX, the importance of such a cross is reduced). The break is also good news for the Nasdaq and Nasdaq 100, as they seek to make new multi-year highs of their own.

Suffice to say, the Nasdaq did post a breakout: stops go on a loss of the 3,387 swing low.

Naturally, the breakouts have reversed some of the bearish markers in breadth indices, although these same metrics remain close to - or at - overbought territory. There isn't much room for these to go higher. Interestingly, the Nasdaq Summation Index changed little despite the good move in the parent index: if trading using this breadth index, then you wouldn't be a buyer here.

The Russell 2000 had the best of the primary index action: it gained over 1% in a move which took it close to a new multi-year high too. Those looking for volatility trades (option traders) would do well to focus on this index.

Action is likely to be light until the Fed makes its pronouncement. With breadth as overbought as it is, there is a risk we could see substantial 'bull traps' generated by yesterday's breakouts. An option spread is probably the best play in these conditions, because if the Fed announcement is greeted positively, it will likely cause a flurry of short covering trades. And naturally, any downside will be quick and fast - as is typical for 'bull traps' (+ overbought conditions).

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Decent Attempt By Bulls

noreply@blogger.com (Declan Fallon) — Tue, 18 Jun 2013 01:42:37 PDT

Okay, bulls couldn't hold all of their gains by the close of business, but their attempts at breaking the consolidation still have merit. None of this changes the overbought condition of breadth metrics, but it suggests a mini-rally could emerge before breadth is again in heavily overbought territory.

The S&P managed to edge a break of declining resistance on confirmed accumulation. Bearish technicals remained bearish, but the net technical picture is still bullish.

The Nasdaq hasn't yet managed to follow the action in the S&P, but it won't take much tomorrow to generate a supporting breakout. Volume also climbed to register an accumulation day.

The semiconductor index also experienced a strong day, although it's questionable whether it managed a breakout. However, if it can take out its last swing high it will offer a stepping stone for the Nasdaq and Nasdaq 100 to push higher.

The Russell 2000 had a tight inside day. Luckily, it's closer to resistance than support, so there is a chance a strong opening gap on Tuesday could trigger a short covering rally.

Should there be upside gaps on Tuesday, look for the gap-fill to provide longside opportunities. Today's action was bullish enough to hand momentum back to bulls, although breadth metrics suggest any rally will not last very long.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Weekly Market Commentary: Breadth Still Favours Bears

noreply@blogger.com (Declan Fallon) — Sun, 16 Jun 2013 14:14:59 PDT

While Thursday's rally favoured bulls, with buyers jumping in at channel support for the S&P and 50-day MA for S&P and Dow, Friday took some of this gloss off - but didn't reverse all of the gains. However, market breadth remained in the bearish camp, with breadth metrics either overbought (Bullish Percents) or declining (Summation Index).

The peak in New Highs for both the NYSE and Nasdaq is very clear and this has typically resulted in an intermediate correction, or at least a period of sideways action

The Percentage of Nasdaq Stocks above the 50-day MA didn't quite make it back to overbought levels before it turned lower. Plenty of room down before we get a good swing low in the Nasdaq.

The NYSE Summation Index has collapsed: perhaps 2-3 weeks before it has its swing low.

But the S&P Bullish Percents have managed to work its way to a (weak) support level. This week may offer some upside, but this will need to happen early in the week if it's to honor this.

There is also a key divergence playing out between copper prices and the semiconductor index: weak copper prices should lead to weaker semiconductor prices. The question is how long will it take before the semiconductor index takes a spin lower, taking the Nasdaq and Nasdaq 100 lower with it.

Should indices lose their 50-day MA as support, then shorts will have a free run to the 200-day MA.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: S&P at Channel Support

noreply@blogger.com (Declan Fallon) — Wed, 12 Jun 2013 15:36:03 PDT

Sellers kept the pressure on, but volume was lighter than yesterday. The S&P finished at channel support and will find itself under pressure tomorrow. Technical weakness expanded with a 'sell' trigger between +DI and -DI.

The Nasdaq experienced a 1% loss, dropping just below weak support. Technical weakness expanded to suggest further losses are likely.

The Dow is perhaps the most interesting of the indices. It had a picture perfect reversal of resistance and is now sitting (picture perfect) at 50-day MA support. Can buyers make a stand tomorrow?

Small Caps were quiet, sitting neither at key support or resistance.

The Dow looks to be the index to watch tomorrow: potential buy at the open, although indices are showing favour to the downside. Sectorbreadth confirms bearish conditions.

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Daily Market Commentary: Sellers Edge It

noreply@blogger.com (Declan Fallon) — Tue, 11 Jun 2013 14:07:06 PDT

Yesterday's highs remain the risk metric for new short positions. Bulls were unable to maintain their late morning advance after opening gaps down across the indices. Until such highs are broken, the near term short position remains favoured.

The S&P saw increased volume in confirmed distribution. It was accompanied with a 'sell' trigger in On-Balance-Volume. In the near term, there is an upcoming convergence between declining resistance and rising support of the channel. Channel support is also aided by the 50-day MA. Support should be stronger, but take nothing for granted!

The Nasdaq also has a rising support level to work with. Wednesday may be the day this support is tested. Technicals, with the exception of the MACD, remain bullish. Selling volume was also higher, but it wasn't enough to trigger a 'sell' for On-Balance-Volume.

If shorts are able to push through rising support, then the 50-day MA is next (and a good place to take profits from near term short positions).

The Russell 2000 has the most room to run to support. Horizontal support near 954, and/or 50-day MA currently at 957, are downward targets for short players. Technicals are weaker than they are for the Nasdaq.

Tomorrow should see preliminary tests of supports. Partial profits on today's short positions may be taken, but some follow through lower over the coming days is likely.

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Daily Market Commentary: Low Volume Action

noreply@blogger.com (Declan Fallon) — Mon, 10 Jun 2013 14:39:52 PDT

No real surprises with today's trading: narrow action on light volume. The biggest gainer was the Russell 2000, but it remained below rising support and the swing high.

The Nasdaq finished the day flat, but it was able to close above its 20-day MA. Should morning trading drop the index below its 20-day MA it will offer a shorting opportunity with a stop above today's high.

The S&P finished just below the 20-day MA. As with the Nasdaq there is a shorting opportunity with a stop on today's high, which will be strengthened if the market opens down.

A gap higher above today's high would negate the shorting opportunity.

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Weekly Market Commentary: Recovery Too Little Too Late?

noreply@blogger.com (Declan Fallon) — Sun, 09 Jun 2013 15:49:09 PDT

Despite a solid Thursday/Friday there are warning signs to suggest the recovery is not all it seems. For the Nasdaq Summation Index it was a straight down week from an overbought state.

The NYSE Summation Index was also down, with a confirmed technical 'sell'. It may attempt a (weak) swing low from here, but it will need to finish next week strongly

Same story for the S&P Bullish Percents, as it reversed off overbought conditions and finished Friday at the weekly low.

Although the Nasdaq Bullish Percents had a quiet week. While not as frothy as 2010, the breadth index is at a level typical of a swing high.

Friday's gain on the daily may offer some follow through, but the weekly picture is firmly in the bears camp. A strong week will be needed for bulls to overwhelm bearish breadth. Even then, the overbought nature of the market will require a decent cool down period - which may translate into sideways action, but hard to see new highs in the short term.

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Daily Market Commentary: S&P Channel Support Holds

noreply@blogger.com (Declan Fallon) — Thu, 06 Jun 2013 14:39:41 PDT

The S&P lived up to its potential with a defensive rally off the 50-day MA / channel support (take your pick). Next test is channel resistance at the 20-day MA. Technicals likely to turn net bearish tomorrow despite bullish recovery.

The Nasdaq is lingering near former channel resistance, but it's not really a significant support level. The 20-day MA overhead will be tougher resistance. Technical weakness expands.

The Russell 2000 bounced back, but it's lacking a logical foothold. Relative market strength hasn't broken the flatline (unlike the Nasdaq outperforming the S&P).

For tomorrow, keep the focus on the S&P. Can bulls follow through on the bullish recovery?

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Selling Continues, S&P Down at 50-Day MA, Russell 2000 Fails To Hold 20-Day MA

noreply@blogger.com (Declan Fallon) — Thu, 06 Jun 2013 01:50:20 PDT

Just a quick update as I didn't do a post after the market close yesterday. Selling continued to drive markets lower, confirming a large negative divergence in Nasdaq breadth (Percentage of Nasdaq Stocks above 50-day MA) with increasing technical weakness.

The S&P didn't escape the wrath of sellers, but does at least have a combination of 50-day MA and former channel support to lean on. If there is a buying opportunity for a bounce, then the S&P (SPY) is the place to look.

The Russell 2000 fared less well. It was unable to hold its 20-day MA as support and is caught in a price void with next support down at horizontal support and 50-day MA at 954.

For Thursday, look for bounce opportunities in the S&P. It has the easiest risk:reward calculation (break of channel support, target upper channel). There is also likely to be demand around 1,600 too. Other indices may rally too, but it's harder to identify where solid support may lie (and resistance is more prevalent).

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Losses offset Yesterday's Gains

noreply@blogger.com (Declan Fallon) — Tue, 04 Jun 2013 15:24:36 PDT

Yesterday's bounce didn't last long as indices struggled to defend 20-day MAs. Only the semiconductor index is showing some backbone in this regard, although it's working off a MACD trigger 'sell'.

The Nasdaq lost ground against its 20-day MA after rallying to close above this MA yesterday. Luckily, the index has a former resistance line, turned support, to help. However, should this be lost it will be looking at the 50-day MA for support.

The Russell 2000 is hanging on to a trendline support, and is close enough to its 20-day MA to suggest it could play as support tomorrow.

Nasdaq Breadth continues to roll over in line with a swing high. It will take more downside until a decent swing low presents itself.

Tomorrow will again put the focus on 20-day MAs. Better for the long term health of the rally will be for a move down to 50-day MAs. With the possible exception of Utilities, sectorbreadth remains too bullish for a swing low. .

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Stock Picks: $JMBA, $MELI, $NLS, $SB, $WFT

noreply@blogger.com (Declan Fallon) — Sun, 02 Jun 2013 15:29:46 PDT

The following stock picks were discussed since the last update. Fundamental reviews are available from the links provided.

Jamba Inc (JMBA)

MercadoLibre (MELI)

Nautilus (NLS)

Safe Builders (SB)

Weatherford (WFT)

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Weekly Market Commentary: Breadth Overbought Once More

noreply@blogger.com (Declan Fallon) — Sun, 02 Jun 2013 14:52:16 PDT

The push from the April swing low (in the Nasdaq) was premature in breadth indicators had not reached oversold conditions, so it hasn't taken the long for breadth to again become overbought. However, the recent similarities to March suggest this may prove nothing more than a pullback of the larger advance, although more downside is needed to at least take the heat out of the breadth indicators. Ideally, a more substantial decline would push breadth indicators into a situation where a tradeable (buy) low would emerge, but this will take a while.

The Nasdaq has slowed its advance, but maintains its breakout. It's going to take a big swing to kill the bull trend. At the moment, what's happening is a blip in the larger bull trend.

The Russell 2000 remains pegged by channel resistance. Shorts will be looking for a move to channel support, which is the favoured play at the moment.

It's a similar story for the Dow Jones Index, which reversed from channel resistance to close at a weekly low.

And the S&P Bullish Percents have reversed from a maximum of 90% of S&P stocks on 'buy' signals. Things are likely to remain rocky for the S&P (and Dow) for another few weeks.

The market remains in pullback mode, although profit taking is a better option than outright shorting, but if looking to short, the Russell 2000 and Dow remain the best bet: Large Caps are looking more vulnerable than Small Caps.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: S&P 'Bull Trap' Intact

noreply@blogger.com (Declan Fallon) — Thu, 30 May 2013 14:19:58 PDT

Despite missing a couple of days of action, the 'Bull Trap' which emerged in the S&P last week was still in play by today's close. The two attempts at a rally in the past few days were rebuffed by the close: 1,687 is looking increasingly like a swing high top, and a good place to measure risk:reward if looking to go short. The MACD has already triggered a 'sell'.

The Nasdaq doesn't have a 'Bull Trap' to deal with, but it too has struggled to make it past the swing high of 3,532. The MACD 'sell' trigger lends weight for a top.

Nasdaq Breadth continued to roll in favour of bears; for example, the Percentage of Nasdaq Stocks above 50-day MA is on two bearish technical signals, and is some distance shy of the 2013 high posted in January - a very significant negative divergence to the parent Nasdaq.

Finally, the Russell 2000 is in a similar position to the Nasdaq. However, it is enjoying a relative strength shift in its favour against the Nasdaq. Other technicals are split between bulls and bears, although bulls maintain prior momentum until proven otherwise.

There are growing bearish signs, but prior momentum keeps bulls in control. The potential 'short' plays defined by the swing highs remain intact, although the S&P is looking to be the better short play than the Russell 2000.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Weekly Market Commentary: (Another) Reversal From 52-Week Highs

noreply@blogger.com (Declan Fallon) — Sat, 25 May 2013 14:41:46 PDT

Last week, the number of 52-week Highs / Lows in the Nasdaq and NYSE flashed a new peak and reversed by weeks end. The peak in the NYSE New Highs / Lows was more prominent than the Nasdaq, although the last peak didn't result in a consolidation/decline. However, the chances are high that this peak will lead to a consolidation/decline, and this will remain in play until the next swing low (peak in 52-week Lows). Taking Profits should be the focus until the worst of the decline plays out.

The Percentage of Nasdaq Stocks above the 50-day MA reversed just shy of overbought territory. Technicals also turned tail before hitting the overbought mark. This increases the probability for another leg higher before a true top comes into play. This will offer another chance to take profits should it come to fruition.

Meanwhile, the Nasdaq is not showing any obvious signs of a top. So it's left to breadth metrics to suggest a top is in place.

The Russell 2000 reversed off channel resistance in a potential short play opportunity. Stops go on a break of 1,008.

The Dow is another index at channel resistance. Stops for shorts on a break above 15,542.

Next week will be about preserving profits, and building potential short plays second. Large and Small Caps are offering good shorting opportunities. The Nasdaq is suggesting a top, but another throw over leg higher is not outside the realms of possibility. Be Prepared.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: S&P Bull Trap

noreply@blogger.com (Declan Fallon) — Thu, 23 May 2013 15:38:16 PDT

Today's losses were small, but enough to leave a 'Bull Trap' in the S&P. It was the only real action of note on the day. Lower volume kept this from being a distribution day.

The S&P came close to a test of the 20-day MA with a pending bear cross in the MACD and On-Balance-Volume. There was also a relative shift against the Russell 2000, which is better news for bulls as defense of Small Caps outweighed that of Large Caps.

The Nasdaq opened just above its 20-day MA, but spent the rest of the day advancing. MACD trigger 'sell' probable tomorrow.

The Russell 2000 defended rising support, and was able to close a little higher.

Tomorrow may see a little more aggression from bulls in the morning, but it will be tough to see significant inroads into yesterday's losses.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Nasdaq Breaks Support

noreply@blogger.com (Declan Fallon) — Wed, 22 May 2013 15:16:23 PDT

It has taken over a month for sellers to mount a high volume challenge, but today was one such day. In terms of total volume, it was one of the worst days for 2013. And in the context of the rally, it offers a sign for a potential swing high, but doesn't break the larger bullish trend - it will take much more selling to do that.

The Nasdaq did lose the tightly ascending support line established from the April swing low. A move to the 20-day MA looks most likely.

Supporting a call for a swing high in the Nasdaq, is the swing reversal in the Percentage of Nasdaq Stocks Above the 50-day MA.

Plus the heavier than expected selling in the semiconductor index; a key leadership index for bullish rallies. There was also a relative shift away from semiconductors to Nasdaq 100 stocks at large. The semiconductor index is likely to see a 20-day MA test on Thursday.

Something the also hard hid Russell 2000 is a few days away from doing.

Not surprisingly, the more defensive Large Cap S&P took the least damage, but did register a distribution day.

Today was the first confirmed sign of a possible top. The higher volume selling was the obvious clue, but the milder damage to the S&P relative to the Nasdaq and Russell 2000 suggests the appetite for speculative stocks is dropping fast. Without money flow in the latter indices, the prognosis for the rally lasting much longer turns negative. Profit taking likely on any strength in the morning...

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Small Gain Accumulation

noreply@blogger.com (Declan Fallon) — Tue, 21 May 2013 15:04:06 PDT

The gains were small. The volume greater. The rally ticks along. There is little more to say than that...

The Nasdaq is riding a sharper angled trend, but breaking this wouldn't be the end of the world. And realistically, this will happen sooner rather than later.

The Russell 2000 maintains its run of good form, and its relative advance against the Nasdaq.

The semiconductor index took a small loss. Again, nothing to be too concerned about, but look to the semiconductor index to lead the Tech indices.

Daily Market Commentary: Low Volume Losses

noreply@blogger.com (Declan Fallon) — Mon, 20 May 2013 13:45:37 PDT

The mini-rally started in mid-April continued to rule the roost. Today's low volume losses continued with the trend which has supported the rally: namely high volume gains, and low volume losses.

The S&P sits 12% above its 200-day MA, which is unusually high. Although the S&P has managed to rally to 20% above its 200-day MA; typically this is done after a major low, and not at the latter stages of an advance. Neither action in the indices or supporting technicals suggest this rally is about to end soon.

The Nasdaq is as similarly extended as the S&P from its 200-day MA, at 12%, but is further from natural support than the latter index.

Helping the bullish cause is the Percentage of Nasdaq Stocks above the 50-day MA, which has yet to reach prior overbought territory in the 80th percentile (it currently sits at 70%). Again, another indication this rally may have more room to run higher.

However, the Nasdaq Summation Index has again come back to the area of its last high - and possible resistance.

The Russell 2000 has managed to make relative gains against the Nasdaq. This is better news for the continuity of the rally, at least for Small Caps.

While the rally has been narrow and steep, there isn't an indication a top is going to develop. For this to happen there will need to be a retest of the high, and at the moment, this high has yet to be confirmed.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Stock Picks: $AMBA, $VECO, $CREE, $FTK, $MW, $CCC, $BYI

noreply@blogger.com (Declan Fallon) — Sat, 18 May 2013 15:30:22 PDT

The following stock picks were reviewed in the links provided in the symbol:

Ambarella: AMBA

Veeco Instruments: (VECO)

Cree: (CREE)

Flotek Industries (FTK)

Men's Wearhouse (MW)

Calgon Carbon (CCC)

Bally Technologies (BYI)

Daily Market Commentary: Distribution

noreply@blogger.com (Declan Fallon) — Thu, 16 May 2013 15:36:14 PDT

Not surprising given the gains in recent weeks, but sellers made their presence felt on higher volume. The good news was there was no real damage done to the trend, and technicals remain buoyant.

The S&P kept its nose above the rising channel. An undercut would set this up for a move back to channel support.

The Nasdaq is well above resistance, and the heavier selling didn't really do much damage at a point level. Not much more to add to this.

The semiconductor index remains inside the rising channel. Today's selling more noise within the larger bullish trend. This remains bullish for the Nasdaq.

The Russell 2000 is holding on to its relative advantage against the Nasdaq.

Bulls to continue the onslaught? It's going to take a number of consecutive selling days to break this trend.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Small Caps Advance

noreply@blogger.com (Declan Fallon) — Tue, 14 May 2013 15:18:01 PDT

Small Caps got a key uptick against the Nasdaq after two months of underperformance, although the Russell 2000 continued to lag against the S&P. However, today was important day for re-establishing the importance of Small Caps as a component of the broader rally. No rally can sustain itself for long periods without the participation of the Russell 2000.

The S&P also had a moment in the sun by breaking the boundary of the rising channel. The upside channel break accelerates the rate of the advance, although makes it more vulnerable to a sharp reversal - but the net effect is more bullish than bearish. Technicals are in good shape too.

The Nasdaq had its own good day, registering an accumulation day as had the S&P. The sharp shift in relative strength from Large Caps to Technology stocks took a modest retreat, but remains strongly in Technologies favour.

Today kept the bullish momentum rolling, with a good opportunity for more to follow.

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Daily Market Commentary: Modest Uptick

noreply@blogger.com (Declan Fallon) — Mon, 13 May 2013 15:25:37 PDT

No great movement or volume, but at least the push was higher. The S&P continued to track along upper channel resistance. Technicals still in good shape despite overbought stochastics.

The Nasdaq extended its channel breakout, playing the lead role (note sharp advance in relative strength against the S&P). Its breakout should provide the S&P with the impetus to break upper channel resistance.

The Russell 2000 took a small loss, which continued the index's performance lag against the Nasdaq.

Nothing in today's action to suggest bulls are losing control of the market. Small Caps are the weakest index, so if trouble is brewing it will likely express itself here first.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Weekly Market Commentary: Double Top in New Highs? Probably Not

noreply@blogger.com (Declan Fallon) — Sun, 12 May 2013 14:57:46 PDT

Unusual behavior in New Highs / New Lows. After what looked to have been a fairly reliable peak in the number of (smoothed) NYSE components at new 52-week highs, now looks set to make an even higher high. Given the last peak was a 10-year high, it's odd to see this challenged so soon. However, it does point to the overall strength of the rally to have so many components making new high - a total contrast to the action in the 2007 top. The current situation has far more in common with peaks in 2004 and 2010, which marked consolidation points of larger rallies

Market Breadth hasn't reached overbought conditions, supporting the idea for further gains. The Percentage of Nasdaq Stocks above 50-day MA hasn't broken the 70% barrier. And technicals are not overbought.

The Nasdaq Bullish Percents successfully back tested support, with plenty of room for upside.

All indices are rallying within themselves, so there is no obvious signs for a top.

Another week - another opportunity to build on past strength?

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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Daily Market Commentary: Channel Resistance

noreply@blogger.com (Declan Fallon) — Thu, 09 May 2013 15:18:35 PDT

Modest losses were not unexpected given the sequence of gains. The S&P made a pitch perfect rebuttal off channel resistance. Bulls may try and repeat the action of January and February, when the index bounced along the upper resistance line.

The Nasdaq pinned a doji on higher volume. However, the index remains above a former ascending resistance line (turned support). Increased volume has more in common with churning, than direct distribution, but bulls are likely to see a retracement and test of the new support line, if not the 20-day MA. The mid-April rally hasn't had opportunity to pause and consolidate, so now may be the time.

This will also be an opportunity to test the resolve of the breakout in the Russell 2000. The relative loss against the Nasdaq suggests selling will hit Small Caps harder than other indices. This will likely make it the first index to test breakout support (of 954).

Technicals aren't pointing to any particular weakness, and only the S&P at resistance is suggesting tomorrow will see sellers make a run at things. So look to the S&P for leads (it could follow the Nasdaq and break resistance).

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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