In Weekend Charts I talked about the 21MA rejection we witnessed on $SPX on Friday. Looking at today’s market action we see a divergent market with $NDX green and the rest of the market struggling as internals are decidedly negative.
A quick glance at major index charts shows that the $SPX is not the only index to struggle with key moving averages (MAs). As long as these MA’s are not recaptured on a closing basis this recent bounce off of the 200MA remains subject to risk lower.
To recap: $SPX bounced off of the 200MA and then met rejection at the 21MA:
which also matched the rising trend line:
If you think the rejection was a coincidence you may want to note that $SPX was not alone finding key resistance at key moving averages.
Joining $SPX as MA rejects are:
$NYSE at the 50MA (note also the precise bounce off of the 250MA):
$RUT at the 21MA:
These initial rejections are no surprise as MAs can be key market pivots and hence offered a tradable edge. These MA rejects currently represent a dividing line in the sand. Bulls need to get above them on a closing basis or risk a sizable retrace or potentially new lows.
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Categories: Market Analysis