Stuck on the 50-DMA

Toward the end of Wednesday's weak action, we posted an item on the challenge faced by the broad equity market as the S&P 500 sagged just below its 50-day moving average. We suggested that the short-term burden of proof (to say nothing of the long term!) remained with the bulls...just in time to see the market rocket higher yesterday in a mildly strange session. Oil moved up sharply, bond insurers were downgraded (good grief...was that still in question?), questions about Lehman persisted, &c. But a few decent retail prints and some good ol' fashioned animal spirits were enough to take 'em higher.

The trading action yesterday was unusually robust, with solid volume, and a classic open-at-the-low, close-at-the-high move to the upside. Looking back over the last few months, we've seen a few days with similar action, just after marking (and re-testing) the March lows, twice in April, and again yesterday. All but the mid-April case were followed by some sort of non-trivial pullback, the sort of moves that can whipsaw investors into and out of the market in all the wrong ways.