As we have been observing for a few weeks now, the 20 period weekly moving average is still signaling caution here. Not only is the reference point itself acting as resistance to price, as you can see on the weekly chart of the Nasdaq Composite Index below, but it is declining. That does not preclude the bulls continuing the progress they are making on the daily timeframe of higher highs and higher lows since the June 4th bottom. However, it does compel me to continue to stay relatively lightly invested on the long side until more progress is made.
When you look back to the weekly chart over the years, particularly since the March 2009 major bear market low, there is little doubt that most profits for technically-drive momentum swing traders come on the long side when the 20 period weekly moving average is clearly rising along with price on the major index charts. Until then, I will at least respect the notion that traps still abound.