This morning we quickly made a journey below S&P 1307 aka the 50 day exponential moving average but rather than leading to an extensive selloff, a buy order came in quickly sending the S&P 500 back up at a 45 degree angle, back into a safe zone. As I always say the end of the day price is far more important than what happens intraday and I'm not the only one who knows that (hint hint).
The rest of the day has been spent bouncing around in a small range between the 50 day simple moving average as the ceiling (1315) and the 50 day exponential moving average as the floor (1307). Generally I don't like to mix and match the two, but right now both seem to be in play. Bears would like to see 1307 broken on a closing basis... keep in mind Google (GOOG) reports after the bell, so maybe they say something good and we gap up tomorrow. We are overdue for a gap up after all. ;)
On a related note I often get the question why do you use exponential moving averages rather than simple; I don't have a great answer for that other than I seem to be able to have more luck reading tea leaves with the former rather than latter. Other people use the simple and do very well in their technical trading. Neither is 'right' or 'wrong'. For that matter technical analysis is not fool proof. It's just another tool for the belt to help put odds in your favor and give you some sort of road map.
At this point 6 of the past 7 sessions have been negative on the S&P 500 so an oversold bounce would not be out of the question. But the action overall is not very healthy.