A Tale of Two Moving Averages

Look at this weekly chart of the Nasdaq Composite. On it I have plotted a 20-week and a 50-week moving average. See how the Nasdaq loves to bounce from these simple charting tools?

Particularly interesting is the bounce that is currently unfolding off the 50-week moving average from the steep decline we've seen over the past seven weeks. 

Those who are wondering whether the market has made a significant bottom will be intrigued by the fact that this level also coincides the Nasdaq's 50% retracement level of the swing from the Oct. 1998 lows to the March 2000 highs. This does not mean that the market can't go lower. . . after all, sentiment levels as reflected by the percentage of bullish advisors, put/call ratios, and the mood of the general public is not consistent with past major market bottoms--but the bounce we're now witnessing certainly fits the scenario suggested by the chart.

See you tomorrow,

Eddie