The S&P 500 closed a hair shy of the important 50-day moving average, after trading above it much of the afternoon Thursday.
Stocks still closed sharply higher, shaking off the doldrums with a rally charged up by new hope about the Trump agenda and a strong start to earnings season.
Technical strategists say what could have helped the rally was if the S&P were to close above 2356—the 50-day moving average. The 50-day is just what it sounds like, the average of the 50 last closing prices on the S&P 500.
The S&P 500 closed at 2355, up 17 points, or 0.8 percent.
"If one had a more bearish outlook...I guess you could view on the way back up, that the 50-day could act as resistance, and the inability to push through it would keep your very short-term bearish thesis alive," said Oppenheimer techncial analyst Ari Wald, who is bullish on the market. "On the other hand, one can't predict that type of price movement with consistency. The pullback should be bought."
The S&P fell below its 50-day last week. A close above would be considered a positive for the market, just as a close below it is a negative sign, according to technical analysts.
"We have seen the index oscillate around the the 50-day at times. It can create some whipsaws. It is a widely watched level," Wald said, noting it would have been a near-term win for the bulls if the market closed above the 50-day moving average.
The market, however, did close above another key level. The S&P 500 closed above its descending trend line at 2352, a positive sign, according to Scott Redler, partner with T3Live.com
The descending trend line is drawn from a series of lower highs since the S&P reached its all-time high of 2400.
"Today the bulls are marking a first attempt to close above it," said Redler, adding it's bullish for the market.
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