Stock Market Commentary: Respectable Recovery After 20-day MA Tests

It was looking to be a gloomy day for bulls as stocks gapped down dramatically from the open, but a late afternoon rally restored prices and kept pressure on resistance of the nascent downtrends.

For the Nasdaq the day finished just shy of the 50-day MA (the real battle zone) registering a distribution day in the process. The test for Friday is whether the new down channel is really a channel or just a brief pause as part of a broadening rally.

The S&P made a strong charge from its 20-day MA to finish nestled against channel resistance but still 6 points below its 50-day MA. For those who took advantage the 20-day MA buy was a good day-trade.

The Russell 2000 was another to benefit as it recovered from the 50-day MA and is well positioned to take advantage of its market leadership role. Any gains Friday will break the channel and won't leave it far from pushing new highs at 650. Perhaps the index to watch for Friday.

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