Stock Market Commentary: 50-day MAs hold

While yesterday's gains looked like short covering, today was a day when neither shorts were willing to step back in with conviction or existing longs were prepared to take profits. There was a lot to like here but that doesn't mean the market is not vulnerable. The only index to creep below its 50-day MA after breaking through was the Russell 2000.

The obvious concern on further losses tomorrow is an accelerated downward move as this could quickly morph into a 4-6 day decline, perhaps knocking 10% off the indices and bringing them back to the mini-congestion zone from a week ago.

As before, the index to watch is the semiconductor index; it's short term overbought (only have to look at CCI and Stochastics to see that) but it has dual support of the 20-day and 50-day MAs to look too on the inevitable pullback.

Will bulls drive this on or will bears become more aggressive? The first hour of trading will be interesting.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website

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