The NASDAQ Composite Index briefly undercut its 50-dma on Thursday morning, as I indicated it might in my Wednesday report. That set up the context for an oversold bounce off the 50-dma that carried as high as the 20-dema on Friday. The upside push on Friday was no surprise given that it was also month-end, quarter-end, and the end of the first half of 2018. The bounce was also logical given how far down so many leading stocks had sold off over the prior few days.
By the close on Friday, the NASDAQ was trading near its intraday lows and below its gap-up opening levels. What we have now is a textbook oversold rally into resistance at the 20-dema with a weak close on Friday. It is now a matter of seeing whether this bounce has legs, or whether it will soon roll over again. For now, however, the action looks bearish.
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