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S&P 500 Near its 50 Day Moving Average

After a severe sell off that had investors wondering if the market would see price action similar to the Nikkei of late, the S&P 500 has rallied back to within 5 points of its key 50 day moving average.

After statements by Federal Reserve chairman Ben Bernanke that seemed to indicate that the Fed would begin tapering asset purchases as well as hike the fed funds rate, the market shed about 5 percent since June 21 to reach a low of 1,573.09. Since that low, the index has rallied nearly 3 percent to reach an intraday high of 1,615.13 on Thursday.

This puts the index within 5 points of its 50 day moving average of 1,620.46.

Dennis Gartman, in a CNBC Fast Money interview, said that the bottom was in for the index, at least for now. Investors have poured money back into the market as a lower than expected GDP revision made it clear that the economy is still challenged as well as easing tensions in Japan.

On Thursday, Fed representative Dudley said that the markets had misinterpreted the FOMC’s comments and that rates will not rise any time soon. He also said that the Fed will continue bond buying and may increase purchases if economic conditions warrant. In other words, nothing has changed.

Disclosure: At the time of this writing, the author was net long the S&P 500.

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