After Russell 2000 (IWM) pushed down to the 200-day MA in its third test of the moving average since early August, there was an accumulation-worthy counter move higher that returned the index back to its 20-day MA.
The problem is that 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 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 has remained in a downward trend. I find this to be a reliable indicator of a bottom, but it needs to be on a 'buy' trigger, and it's firmly on the 'sell' side of the fence.
