Stock Market Summary Friday 31st August 2012

Posted by Stephen Sutherland on Fri, Aug 31, 2012 @ 10:05 AM
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Yesterday's market action was positive.

The Nasdaq Composite fell 1.1% in extremely tame volume (Point A).

When volume is far below average, it means institutional investors are reluctant to sell. Yesterday's pullback was therefore healthy, normal and natural.

Leading stocks action was positive. A greater number of leaders were rising in heavy volume compared to those that were falling in heavy volume. When you see this happen on a market down day, it is classed as a bullish divergence.

The Nasdaq may have fallen 1.1% yesterday but from a technical perspective, it's now looking much better. Before yesterday's behavior, its handle was 'wedging up' instead of 'sloping down.'

But when you now look at its chart from a weekly view, you see it's built a very tight two week handle (Point B) which means it would not surprise me if next week we see a breakout attempt (Point C). For now, things continue to look good.

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Topics: Stock Market Summary