Friday's buying volume was disappointing, but indices held on in the face of today's distribution. Today's lows mark the new support level for stops, although moving averages are also playing as a broad brush of support.
The S&P 500 finished with a doji on its 50-day MA. Technicals remain mixed with a bearish slant in MACD, On-Balance-Volume, and ADX, but with momentum on the bullish side. The index is tied below 1,987 resistance, but is positioned for a challenge of this level tomorrow.
The NASDAQ opened at the 'bear trap', but was able to rally to keep shorts on the wrong side of the trade (along with a close above 50-day MA).
The Russell 2000 trades near August swing low levels. It will soon find itself up against minor channel resistance established in September, although resistance at converged moving averages would seem a more natural stumbling block for an advance.
Meanwhile, the Dow played to a squeeze between 17,121 and the 50-day MA: intraday traders can have fun between these levels, but longer term players would be best to wait for a comprehensive break of one.
The one index to break the bearish action of the day was the Semiconductor Index. It closed with a bullish engulfing pattern (on a previous bullish day). With the 50-day MA nearby to offer support, which has managed to do twice so far in September, it could soon be mounting a challenge on the recent 'bull trap'.
Bears were unable to capitalize on morning weakness, which suggests bulls are well placed to add some more points on the board. 'Bull Traps' are the real challenge, but it will take a few more days of buying before indices get there.