Early Risers

Buyers stepped in to give markets a boost with the S&P going as far as to register an accumulation day.  Today's gains still feel a little early in the game but whatever the cause, the move higher can't be ignored.  This may be part of an a-b-c style, zig-zag move into Fibonacci retracements but much depends on what happens when indices make their second test of 200-day MAs. 

The Nasdaq had the biggest gain on the day, but the buying wasn't enough to register an accumulation day and it didn't quite recover its 20-day MA. Aggressive shorts may look to target the 20-day MA but a move back to 13,181 can't be discounted as part of this mini-rally; so keep stops tight if using the 20-day MA for entry.  Note, today's gain did little to recover the 'sell' triggers in the MACD and On-Balance-Volume. 

The S&P didn't have as big a percentage gain on the day as the Nasdaq, but it did manage to recover its 20-day MA.  On-Balance-Volume is close to a new 'buy' trigger, but the MACD remains firmly on a 'sell' trigger.  The index also continues to underperform against the Russell 2000.  However, the S&P is more inclined to retest its 200-day MA in what had been a picture perfect test of this moving average a couple of weeks ago.  A second test of such a key moving average over a short space of time would suggest an upside break is coming. 

The Russell 2000 will be the first to retest its 200-day MA - and will likely do so tomorrow - if not Monday. The index is accelerating its outperformance against the Nasdaq and S&P, so if going long is your angle - then the Russell 2000 is the trade.  Aside from the MACD, technicals continue to improve. 

Tomorrow offers a two pronged attack; bulls will look to leverage strength in the Russell 2000 while bears will seek to pressure the S&P.  The intermediate trend favors bears and the 200-day MA has contained the bounce, but should the Russell 2000 break through, then shorts will need to keep things tight. 

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

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