Last week’s internals split the market in half. Notice how the Breadth and A/D Lines were stronger on the up days. This strength in the market was confirmed by a declining VIX that broke down and closed at the lows.Back in week 11 we reported that a buy signal was printed on the Bullish Percent Index Point and Figure charts. That rally has continued nicely up to this current congestion zone of 805-875 on the S&P.
News of GM and Chrysler on the brink of falling into bankruptcy and President Obama’s removal of GM’s chairman made for an unsettling opening to the week. The markets gapped lower Monday, but strengthened as the week progressed.The ISM manufacturing report Tuesday pointed to a sign that the worst may potentially be over for the economy. This is the second month of improvement with new orders showing a shallower rate of reduction. Friday Employment Situation report showed another 600k+ loss…
Last week the S&P continued its rally right up to the prior 820 support area. The internals favored the bulls with an especially strong Monday and A/D Lines of +1000 the entire week. If we look at week 13, we can see a long shadow on the weekly bar. The fact that the bulls were able to break out over that bar in week 14 is quite bullish.
The four major indices (S&P, Dow, NASDAQ and Russell) finished up slightly on the week, but not before touching the S&P 800 level we talked about. The pullback late in the week feels weaker than in weeks past, the 50-MA acted as a resistance level while the 10-Day MA is acting as support. Following a withstanding rally in week 11, week 12 economic news hinted that confidence may be instilled in the markets sooner than previously thought.The breadth ratios on…
In last week’s news, Warren Buffett’s commented Monday that the economy has “fallen off a cliff,” but is optimistic that the banking sector will recover. Citigroup announced they we’re profiting on the year Tuesday and stocks soared with the DOW up 5.8%, S/P 6.4% and NASDAQ and Russell up over 7%. Citigroup itself ended up 34% on the day. Gold pulled back early in the week before climbing higher with a close of 928.00 on Friday (London Fix PM). As…
Week 10 was filled with economic data. The ISM manufacturing report showed a second straight month of strength which is leading some to say that the worst may be over. In President Obama’s statement Tuesday, he expressed that the long-term valuation of the stock market is attractive. Tuesday a very weak pending home sales report headlined the day’s economic data. The report points to deepening declines for current home sales. The Fed’s Beige Book reported that the recession is deepening,…
The internals do not paint a clear picture of last weeks price swings (Click on the image to read more about the A/D Line and Breadth). With a fake out to the upside mid-week, the bears finished the week on top. Economic news was grim as news of the federal government taking over Citigroup along with a weaker than expected fourth quarter GDP of -6.2% on Friday sent stocks lower.As we continue making these new lows, the VIX (Volatility Index)…
While the media focuses on the Dow, a more accurate gauge of market action is the S/P due to the fact that it is a barometer which contains 500 stocks versus the 30 in the Dow. We have to remember that the market prices in the emotions of traders and investors because it is in essence a balance of greed and fear. Gold continued its bull run touching $1000 an ounce on the London board. Any pullback into the 90…