In contrast, the Dow sliced through its 20-day MA after losing its 50-day MA last week. Next stop is rising channel support, which if when tested, is likely to coincide with a convergence of the 200-day MA. Technicals on the verge of a net bearish turn, which will likely be tomorrow, even if there is a gain.
The Nasdaq successfully tested its 20-day MA, although selling volume registered as a distribution day with a 'sell' trigger in On-Balance-Volume.
Ironically, the index which started the weakness was the only one to close higher, with the MACD ending on a 'sell' trigger. The 'bull trap' above 490 is the next challenge, although shorts maintain the edge by virtue of the breakdown.
Longs and Shorts can again play their respective indices with merit: longs can stick with the Russell 2000; shorts with the Semiconductor index or Dow (although latter is extended for a short play).
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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