Fallond Stock Picks: 50-day MAs Defended
For the Nasdaq there was a clear slice of the support zone which was defined by the breakout gap. Again, the 50-day MA came to the rescue of the bulls with the next support level down at 2,323 - some 80 points away from the 50-day MA. Relative market strength also swung away from speculative Tech to Large Caps - although Small Caps remain dominant (moving from bullish to bullish-neutral)
Speaking of Small Caps, the April breakout gap saw its first test and held. The 50-day MA is still some 20 points away so Small Caps are holding up well. The question is whether they can hold out against the broad selling in other markets
Chief in the strugglers department is the semiconductor index. Technicals are very close to breaking net bearish but the index was able to recover from its intraday break of the 50-day MA.
But for Wednesday it will probably be an open and close near the 50-day MA as buyers and sellers fight for control. If sellers can drive a steep loss in the first hour of trading it would be a tough call for bulls to bring it back; a repeat of January's break of 50-day MA would then be favored.
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