Buyers stepped in to give markets a boost with the S&P 500 going as far as to register an accumulation day. Yesterday'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 yesterday, 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, yesterday'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 yesterday 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 today - 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.
Yesterday's 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.