50 Day All the Way
6th October 2009
The SP 500, DJIA, and Nasdaq all settled near their 50 day MA, and the lower 20 day Bollinger Band on Friday. Monday’s bounce off of these levels provided the support that bulls were looking for as once again investors were buying on the dips. While Bollinger Bands provided stock market support back in June/July, this is the second time the 50 day MA has been tested, and the first time it has held, during this market rally.
While bearish traders with options expiring in October may want to take their small profits now, this market rally continues to show signs of losing steam. Besides heavier volume on down days, technical indicators continue to show divergence with stock prices. For example: Momentum, MACD, and Stochastics all made lower lows while prices have now made higher lows at this latest inflection point.
The battle between the bulls and bears rages on. Trade with caution.
JD
