After breaking down below its 200-DMA yesterday, the Nasdaq faces a big test this morning as it tries to bounce back.  In early trading, the index got as high as 7,493 – just eight points short of its 200-DMA – before pulling back.  We’ve seen a number of historical examples where after selling off and falling below a major moving average, an index tries to quickly bounce back above that level only to be met with another wave of selling.  We may have just seen another example of that, but there’s still a lot of time left in the day.  Therefore, it will be important to watch and see if the index can quickly bounce back and re-take its 200-DMA.  A rally back above 7,500 would be a moral victory for the bulls, while anything below that level will indicate that the sellers still have the upper hand.

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