Yesterday, I opined that Oil was leading the markets in their up and down fashions. Nope, not always - not when it is Fed Day. Energy up in America +2.09% last night. SP500 down -1.09%. The Americans were more or less flat until 2.00 p.m. (NY time) when the Fed announcement was released. Five minutes of rapid fluctuations occurred, then the American indices decided to fall off a cliff.
In America.
DJ -1.38%, SP500 -1.09%, Nasdaq -2.18%, New York Composite -0.59%, Russell 2000 -1.5%.
The last four days: up, down, up, down. That's indecision at its worst. Fundamentals aren't driving this - the news cycle is.
Here’s the SP500 Chart:
The market is becoming very difficult to read under these circumstances. The "Random Walk" Theory is dominating.
OK. So - what do we do? Wait. The chart is holding above the major Support/Resistance Line. Overhead is the 20-Day Moving Average. 20 January - we saw a massive bullish reversal candle on heavy volume. New Lows on the NYSE virtually disappeared. Such events are usually reliable signs that a down trend is finished. It wouldn't take much to push this market higher under those conditions. That's the most probable result. A break back below major S/R would knock that thesis on the head.
Commodities.
DBC +1.21%. Energy +2.09%. Base Metals +1.3%. GLD +0.37%. Iron Ore +1.2%.
There's nothing much wrong with those commodity figures. Usually, the Australian resources have a good correlation to the commodity figures - but not yesterday. Yesterday the commodity figures out of America were very good but our miners and energy sectors fell. Can it be two days in a row? Good commodity figures - but the resources fall? Well - I doubt it.
So it will probably be up to the banks. I noted in my Weekly Report at the Weekend, that the Financials X-Property had hit a new 52-Week Low. It's hard to like anything which is hitting 52-Week Lows. So today? Dunno. In any single day, anything can happen. But XXJ was down -1.83% yesterday. The odds favour a better performance today. Yesterday also looked like a test of major Support, so we could bounce today.
Against the flow of poor overseas results last night, I think we'll end on the positive side today.
(20min delay)