Four of the six indices are holding comfortably above their 50-Day MAs (NYA, Dow Industrials, SP500, XAX) and sitting close to their 20-Day MAs. These indices are all in sideways consolidations.
NASDAQ (technology stocks) and Russell2000 (small caps) are in short term down trends and below their 50-Day MAs. Both, however, had Narrow Range Bodies in the last session, after a Wide Range Bodies (down) the previous session. This pattern often means an end to a downtrend but requires a Wide Range Body to the upside in the next couple of days to confirm.
Altogether, I’m neutral on the basis of this reading – but the broad situation could easily become bearish very quickly – following the Nasdaq down.
Here’s a more detailed chart of the SP500:
This session saw the Index dip below the horizontal support from December/January and recover. The Index is also at the 40-Day MA – so we have a dual support. Indicators have been on a slide, but that’s not necessarily bearish – just a slowing of momentum. And that’s what we’ve been seeing here – a sideways consolidation after a strong up trend. A break lower here would be bearish.
Here are the Bullish Percent charts for the major indices. These are charts of the %age of stocks in each index on a “buy” signal on Point and Figure Charts. They provide an insight into the breadth of the market. Weak breadth usually precedes a fall.
The Nasdaq Composite and the Nasdaq100 are both clearly very weak, with the NDX now well below 60. SP500 has fallen below its 50-Day Moving Average – showing a distinct negative divergence from the SP500 chart. That’s a bearish development. The broadest Index here is the NYA consisting of 2000 stocks on the New York Stock Exchange. It has clearly dipped below its 20-Day MA, but still holding above its 50-Day MA. The OEX (100 biggest stocks from the NYSE) has dipped marginally below its 20-Day MA. So we have a small negative divergence between NYA and OEX on the breadth measures. Only the Dow Industrials remains above both its 20-D and 50-D MAs.
This market is being held up by the big blue chips. That’s not a positive development.
Below is a Candle Glance Group of Commodities. In order: CRB Commodities Index, Agriculture, Energy, Industrial Metals, Livestock, Precious Metals.
Livestock and Agriculture are both positive. I discount any major influence these two sectors might have on the Australian stock market. The others, however, are more important. Energy had a good night last night, up 0.99% and busting up through the confluence of the 20-D and 50-D MAs. Energy was the best performing sector in Australia yesterday, so that momentum looks likely to continue, although there’s often not a lot of carry over to the Ozzie Market. Industrial Metals (GYX) remains bearish – under both the 20-D and 50-Day MAs, with the 20-Day below the 50-Day. Precious Metals is clearly in a down trend, breaking well below the 50-Day MA.
BHP on the NYSE, up +0.45%. EWA +0.39%. Ozzie Dollar continues on a tear upwards, +0.39%. Discounting for the currency effect, BHP and EWA were more or less flat – not a bad performance given the poor result on our market yesterday.
We had a good move up late in the day yesterday. Energy and Financials were the best performers yesterday. That momentum could carry through to today. Industrial Metals and Copper were both a bit better overnight, so the Miners (except Goldies) might also get some love today. The prognosis is looking OK for today.
Just to add a little to the longer term negative view for stocks, here's a chart for TLT (20 Year Bonds, U.S.)
TLT has completed a double bottom and heading higher. That's a negative for stocks. (Money flows in and out of the two, Stocks up - Bonds down; Bonds up - stocks down. Not a tight correlation, but worth watching.)
(I've gotta stop this - this is getting to be a "magnum opus" like the Weekly Report. It's a problem being OCD.)
(20min delay)