On Wednesday I wrote that if we see the NASDAQ Composite Index peel away from its 50-day moving average on the downside then the S&P 500 Index would likely retest its 50-day moving average. That is what we saw on Thursday, with the S&P closing just below the 50-day line on higher selling volume.
Friday’s jobs number came in at a seasonally adjusted 222,000 new non-farm payrolls, triggering a rally in the futures that carried through all day long. Given how oversold everything had become, a reflex rally was not surprising, and the jobs number gave the indexes a convenient excuse to do so.
By the end of the day, the S&P 500 closed just below its 10-day moving average after regaining the 50-day line on the opening gap-up. Volume came in very light, so this looks mostly like a low-volume reaction type of bounce on a news push after things got somewhat oversold. But we cannot necessarily assume that it will bust the 50-day line again given that the objective evidence so far shows that support at the line is holding, for now.
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