The first half of a truncated Fourth of July holiday trading week has not typified what I would call quiet holiday trading. It started out with a sharp futures-led gap-down open on Monday that saw the indexes levitate off their lows in an apparently bullish reversal to close up on weak volume. But appearances in this market can be deceiving.
Tuesday, which was a short trading day ahead of the July 4th holiday on Wednesday, was anything but quiet. The indexes started the day in opposite fashion to Monday’s gap-down open by gapping up at the opening bell. That rally slowly melted away until the final hour when things came loose and the indexes reversed sharply.
The NASDAQ Composite Index, which had successfully tested and bounced off its 50-dma on Monday, ended Tuesday in the red. Volume was lighter due to the shortened trading session, but on a prorated basis would have come in higher than Monday’s volume. As it had for the previous five trading sessions, the 20-dema again served as near-term resistance for the index.
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