After yesterday's push down to the 200-day MA in its third test of the moving average since early August, there was a accumulation worthy counter move higher that returned the index back to its 20-day MA. The problem is repeated tests of support (or resistance) eventually lead to breaks. Today's gain looks good, but I would like to see a rally from here up, and through, the 50-day MA. Otherwise, I suspect a fourth test of its 200-day MA will see a breakdown.

The Nasdaq had a solid, if somewhat low key trading day. Over the past week, trading volume has skewed in favor of accumulation with technicals returning net positive. If you were a swing trader there is the potential for a 'buy' trade with a stop running below the 20-day MA. Go in with low expectations and you might be richly rewarded.

The S&P is offering a similar opportunity as the Nasdaq with a return above its 50-day MA in a move that should go on to challenge the swing high at 4,541. Technicals are net bullish, helped by a holding of the bullish mid-line of stochastics. A push above the August swing high would give impetus for the Nasdaq and Russell 2000 to follow suit.

If there is a warning sign for bulls it's that the Nasdaq Summation Index (NASI) has remained in a downward trend. I find this to a reliable indicator of a bottom, but it needs to on a 'buy' trigger and it's firmly on the 'sell' side of the fence.

More By This Author:

Russell 2000 Lingers At 200-Day MA
The S&P And Nasdaq Are Rebuffed At 50-Day Moving Averages, But Russell Has Potential
Russell 2000 Coming Up To Test Of 200-Day MA