That darn 50-day moving average provided enough intimidation for the bulls that they decided to lock in recent profits and retreat to the nearest exit. However, for a good portion of the day, the indices were trading in positive territory before finally caving in. The S&P and Dow Jones had solid tests of the 50-day moving average, in which there was heavy resistance to be found.

Volume was pretty steady on the Nasdaq while anemic on the S&P. We’re oversold on a short-term basis, but as we have seen over the past few months, oversold/overbought indicators have become somewhat irrelevant with the prolonged retractions. With that said, if this is a legitimate recovery in the markets, you can expect these short-term overbought/oversold indicators to be useless during market rallies. On a weekly and monthly basis, the markets remain extremely oversold, and those types of charts on a technical basis, override a daily chart.

Here’s the Nasdaq and S&P charts…