Another round of concerns on the Turkish financial front sent stocks reeling early on Wednesday. The losses were mixed but most indices closed off their lows and the Dow, which was down well over 300 at one point, ended the day down 138-points or just 0.54%. So depending where you looked, the action was middling to weak. Small caps lagged and the Transportation Index reversed all of its early losses.
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The dollar rallied early but reversed down to close flat and that may have helped keep things from getting even worse, since it was the weakness in some emerging markets' currencies that seemed to be alarming investors.
The I-fund broke down as did the price of several commodities yesterday.
It's just a tough time for stocks right now but it's also a tough month to trade because it has been very choppy with neither the bulls nor the bears being able to hold onto any momentum. The trend is still up and that should keep dip buyers around, but that makes the support lines in the charts all that more important.
We get an earnings report from Nvidia today and being the darling of the semiconductor sector, it could be a market mover since the semiconductor index has been on the brink of a breakdown recently.
The S&P 500 / C-fund broke sharply below the 20-day EMA on Wednesday morning but just as things were looking their worst, there were some dip buyers lurking just above the 50-day EMA. Volume picked up a bit on the slightly panicky early trading so yesterday's low may be a short-term low - that is until after we get a bounce when that low may get tested again. The open gaps above and below are still open so that leaves the uncertainly of which gets filled first.
The small caps (S-fund) were hit hard losing more than 1%, but it closed well off the lows after falling through the 50-day EMA and testing the rising support line. Something is going to have to give eventually as support and resistance get closer and closer.
The Dow Transportation Index grabbed back all of the morning losses with a nice afternoon rally. That 11,000 area looks like it needed to hold for this rally to continue, and it did.
The EAFE (I-fund) was down again making a new low and it is desperately needing the dollar to stop rallying.
This last decline pushed the EAFE Index to a new 52-week intraday low. There are open gaps all over this chart, since the components are all overseas markets that trade when our markets are closed, but there is one notable open gap down near 62 that is suddenly in the picture again.
The AGG (bonds / F-fund) rallied as a safety trade and on the strong dollar, and while it did close above the cup and handle formation, it produced a bit of a negative reversal, which means it could be back visiting the handle before long.
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