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Weekly Market Recap:
Market Sells Back Down and Finds Support At Its 20-Day Moving Average
Monday, The market added another modest gain on top of the big runup experienced on Friday. It was a combination of carry-
over momentum and the continued drop in oil today which stocks seemed to inversely track throughout most of the session. The
Dow gained 48.03 points or +0.41%. The S&P 500 added 9.00 points or +0.69%. The Nasdaq finished the day with a rise of
+25.85 or +1.07%. The market hovered around neutral for the first 2 hours then took off to the upside, putting the Dow up
over 100 points by mid-day. Then as oil prices bounced the market began to give it all back. In the end, the indexes
bounced also an ran into the close. If you take a look at the daily chart for the S&P 500 you will see that the market popped
up above its downward sloping 50-day moving average but still
below a overhead channel line.
Tuesday, It was down at the start, then stocks leveled
off somewhat but then sunk again into the close. The market
was setup to pull-back, so Tuesday's sell-off was not out of
the ordinary. The Dow dropped -139.88 or -1.19%. The S&P 500
lost-15.72 or -1.20% and the Nasdaq ended lower by -9.34 or
-0.38%. There was some negative financial sector news again
which acted as the catalyst but the stochastic had run up
to 85, and the indexes were at a day high, so we ripe for a
drop. The S&P 500 was snapped back to close back below its 50-day SMA.
Wednesday, The indexes continued and intensified their slide from Tuesday right
from the open today and everything indicated another big plunge for for the market, however midway through the
day everything bounced off of something.. who knows what and stocks shot back like a boomarang. In the end, the
index fell and the Dow suffered another 100 point loss. The Dow closed at Dow 11,532 losing 109 points or -0.94%.
The S&P 500 finished the day at 1,285.83 losing 3.76 or -0.29%. Finally the Nasdaq ended at 2,428 down just
1.99 or -0.08%. After the surprise retracement out of nowhere the indexes finally succumbed to weakness in
the financials and pressure by oil.
Thursday, The markets opened lower after two days of losses but quickly snapped into action to close the day
with gains. After the down open, the indexes powered to match yesterday's highs but pulled back slightly into
the close. The Dow for instance was up 150 points but managed to hang onto 82.97 or a +0.72% gain. The S&P 500
which closed at 1,292.93 rose +7.10 or +0.55%. The Nasdaq which has been the strongest recently due to technology
was up +25.05 or +1.03%. It was a combination of some technical factors and another drop in oil prices. If you
look at the daily chart you will see the market riding higher on an upward sloping support line as well as a
rising 20-day moving average. We also had a quick $2 drop in oil prices today and for sure this helped propel
the market higher. All you have to do is look at 5-min. charts for the S&P 500 and oil (USO) for instance and
you will see almost an exact inverse correlation between the two at every point in the day. Of note looking at
the daily chart of the S&P you will see the indexe managed again to climb above its 50-day moving average. This is
healthy for the market to get above this key moving average, but going forward we have an even bigger hurdle
looming overhead, the 200-day SMA which is probably several weeks out.
Friday, There was a narrow range continuation day to
the upside closing slightly higher than Thursday. Oil was down again to about the same degree. There was a lot of
trading activity is stocks the first half of the day and then the enthusiasm simply died down and the indexes closed
out the week with a small pop. The Dow finished the week at 11,659 up +43.97 or +0.38% for the day. The S&P 500
finished at 1,298 up just 5.27 points on Friday or +0.41%. The Nasdaq which was the strongest throughout the week
close down today at 2,452 down only 1.15 point or -0.05%.Oil prices are close to 3 month lows now down 23% since
hitting an all-time high of $147 a barrel in mid-July.
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The week began with a 3-day sell-off down to the 20-day moving average (visible on the daily chart) followed by a bounce into Friday.
Notice the market sites just below a resistance level at 1305.
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The indexes are BELOW their 30-week moving averages. (The 30-Week SMA is a barometer of longer term strength or weakness - See Weekly Charts Below)
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The Big Picture. All Indexes Still In Official Downtrends - But Showing Improvement!.
On the weekly timeframe, you will see that the Dow and S&P 500 indexes are trading down below their 30-week moving averages.
Also, on the daily timeframe the 3 indexes are trading below downward sloping 200-Day moving averages.
On the monthly chart, the market is STILL BELOW its 15-month moving average and dropped back down below its
downward sloping overhead resistance line. (See Monthly Chart Above) However, but the indexes are showing new life
as oil prices plunge and the U.S. dollar starts to firm. You will see from the weekly chart above that the market finally
was able to break its MAJOR OVERHEAD RESISTANCE line after 12 consecutive weeks of trading below it. This is significant move.
Also, notice on the second chart below that, the "classic head and shoulders pattern", that the market has been able to firmly climb
back up above the March lows and has now resumed trading in the bigger macro channel it fell out of. The big spike down you see to the
1200 level could be the final bottom that ends this bear market! On the monthly chart above, you will see that the index close is trading
above the high of last month. Subtle.. but significant.
What To Expect
The markets could go either way at the beginning of the week. If you look at the daily chart above you will see that Friday
the market bounced off of support on its 20-day moving average and climbed back above its 50-day moving average but is sitting below a resistance
level at 1305. The daily stochastic is still somewhat high at 75 and on the weekly timeframe (see first weekly chart above) the market looks
a bit "peaked out" just below the downward sloping 15 and 30 week moving averages.
Oil has suffered one technical break-down after another, first breaking its major support line of almost 6 months, then
falling below its 50-day moving average. Then notice the 20-day SMA crossing below the 50-day SMA as crude plummented at even
a greater downward angle. Oil has now closed 22 days out of the last 25 below its 5-day moving average signifying major weakness and
a total meltdown. Crude prices shed over 3.7% last week, 24% since the July highs..
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