The early selling wasn’t able to force prices lower and bulls were able to stage a recovery by lunch time which accelerated into the close. Large Caps and Tech are well placed for a rally in the near term, but the Russell 2000 didn’t make the cut.

When the S&P gets back to (converging) 50-day and 200-day MAs it will find itself up against supply generated by these key moving averages. However, there is room for upside before then.

The Nasdaq successfully defended 4,900 support on higher volume accumulation. The gains weren’t enough to reverse any of the bearish technicals, but the basis for a swing low could be in place with the bullish hammer.

The Russel 2000 was the one index not to benefit from today’s gain. It posted a loss which kept it close to former channel resistance turned support.

The Nasdaq 100 almost tagged the 200-day MA, and may have created a bullish piercing pattern on today’s close. It’s the index closest to new highs, and the index most likely to lead should bullish confidence build.

Tomorrow will test how much interest there is from bulls to continue with a ‘Santa Rally’. The main concern is the lacklustre action from Small Caps. Without this index, bulls will struggle to maintain momentum. The longside play may be to go with Small Caps, but if bears take advantage of this lull then Small Caps will be on the thick edge of broader market weakness. 

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