Daily Market Commentary: 20-day MAs Hold

Yesterday saw 20-day MA of the S&P challenged for the first time since June. Today registered as a defense of this moving average. However, the Dow Jones Industrial Average wasn't so lucky:

The S&P also enjoyed a relative strength shift against the Russell 2000. This will be bullish for the S&P, although bearish for the larger rally as money shifts from speculative small caps to more defensive large caps.

While the Nasdaq and Nasdaq 100 hasn't yet challenged 20-day MAs, the Semiconductor index is attempting a defense of its 50-day MA. This is the first index to do so and will guide expectations for Tech indices.

The Nasdaq 100 is the only index not to 'bull trap'. The 20-day MA has converged with the upper channel line which should help it tomorrow.  Bulls will have another chance to defend, but if the semiconductor index gives up its 50-day MA it may be tough for the Nasdaq and Nasdaq 100 to continue their rallies.

Buyers can again look to 20-day MAs for buying opportunities, but if it looks like Friday's close will see a close below this average, then it will look more probable next week will start with a bearish tone.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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