The semiconductor index regained its 50-day MA in what offered itself as a potential 'bear trap'. The wedge breakdown is still in play, but buyers probably have enough zest to see this back to 510. A close above 510 would force out the last of the shorts.
The Nasdaq benefitted from strength in the semiconductor index, rallying to challenge (but not negate) the 'bull trap'.
The S&P returned above channel resistance on higher volume accumulation. Shorts will have felt the squeeze after the push above 1,795 in the afternoon. The lack of an afternoon selloff, which has been a feature of the last three days, will have also made shorts flighty.
Watch for another morning gap higher as shorts stew on their positions overnight.
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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