Morpheus Trading: Stocks finally stabilized on Tuesday, with all broad market averages closing in positive territory, led by a 0.9% gain in the small and mid-cap averages. Although the market moved higher, the action didn’t pack much of a punch, as the S&P 500 and Dow Jones failed to clear the high of Monday’s narrow bar. Volume was as light as well, so not much to get excited about for the bulls.
All major averages except for the Nasdaq Composite are still below their 50-day moving averages. However, all averages are still trading above the last major swing low, so the uptrend (in our opinion) is still intact. See this recent analysis for more details.
The daily chart below clearly shows that the NASDAQ Composite is in much better shape than the S&P 500.
The NASDAQ is closer to overhead resistance, so it will not have to cover as much ground to clear resistance. The uptrend remains in decent shape.
The 50-day MA has held up, and the action is still well above the last major swing low. The 20-day EMA is beginning to turn down and will offer some resistance, but is not in danger of crossing below the 50-day MA yet.