The rally in the S&P stalled out at the 50-day MA. The index has underperformed since July and Friday's gain only made modest in roads into returning to a leadership role.
On the flip side, Friday's sell off in the Nasdaq tagged the 50-day MA before mounting a recovery. Such action looks more like a recovery 'buy-the-dip' which plays with the continued relative out performance of Tech indices relative to Large Caps.
Small Caps had enjoyed a period of out performance, but looking back over the last 6 months it has been in a state of flux. It too found support at the 50-day MA as did the Nasdaq, but it lost relative ground to the Nasdaq. Small Caps are a critical leadership index for secular bulls and it's struggling.
For tomorrow, look for some bullish upside as bulls test the resolve of Friday's bears. Whether new highs can be delivered is another matter, but I suspect markets will deliver a day of tight action. If bears do win out, look for a walk down of 3-4 days back to Friday's lows.
You've now read my opinion, next read Douglas' and Jani's.
I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for "fallond".
If you are new to spread betting, here is a guide on position size based on eToro's system.
Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.
Follow Me on Twitter
Dr. Declan Fallon is the Senior Market Technician for ChartDNA.com, and Product Development Manager for FirstDerivatives.com. I also trade on eToro and can be copied for free.