Seven days straight down for the NASDAQ Composite gave things a bit of a porcine odor by late yesterday and early this morning. That led to a logical oversold reaction rally today. Short-sellers who have been riding the bear wave since the S&P 500 reversed at its 200-day moving average over three weeks ago certainly had to have been feeling quite piggy by yesterday’s close.
Since the mid-August peak three weeks ago, the NASDAQ Composite has broken hard, posting only three up days vs. twelve downs days during that time period. Today’s bounce came on lighter volume and could carry as far as the 50-day moving average where initial moving average resistance lies.