200-day MAs come into play for indices

There is still plenty of time before it happens, but given markets are making positive gains beyond the last major swing highs in (May)/June we have to consider the next major test of 200-day MAs.  Even if this proves to be a bear rally, each gain firms up the possibility that the June lows *are* the low for this cyclical bear market (the secular low was March 2009, and the secular bear market ended in 2013 - at least for the S&P).

The Nasdaq is leading the indices having handily take out the June swing highs. Accumulation has been climbing with the rising On-Balance-Volume, and the MACD on a new 6-month high.  Stochastics are overbought, which you want to see in a rally (it's when stocastics [39,1] drift out of overbought territory you have to worry).

The S&P hasn't quite made it beyond the June high, but with the 200-day MA not far away there is likely to be a combo breakout-test on the way.  If there is a downside, On-Balance-Volume is on a 'sell' trigger, but it came on the start of a buying recovery before the 'sell' trigger.  Other technicals are positive. 

The Russell 2000 just edged a close above the June high (and has the most room to run to reach the 200-day MA).  Summer trading volume has hit this index harder than others, but the Fall season should see a pick-up - particularly if the 200-day MA can be breached. 

There has been little pause in this rally since late July, so lets assume the test of 200-day MAs come before a test of the last swing low of this rally (in late July). Buyers have control and likely will keep it until the holiday season is over.

You've now read my opinion, next read Douglas' blog.

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