The S&P saw a similar day to the Dow, having both a big gain early and a major sell-off later, ending modestly higher.  The low on the day came right between the 20 and 50-day moving averages.  The late rally also gave the chart a nice little kangaroo tail, which is caused by a rally after a deep mid-day sell-off.  That usually leads to higher prices in the short-term, and sometimes into the intermediate term, although there are exceptions.  In August we saw two kangaroo tails turn south again within a couple of days.


                                    Chart provided courtesy of www.decisionpoint.com

Yesterday witnessed the third outside day in the last five days.  That is quite rare.  An outside day - which occurs when the day's high is higher to the prior day's high, and the low is lower than the prior day's low - is considered a reversal pattern.  We could be seeing an intermediate-term change in direction to the downside, but it doesn't have to happen right away.  It just shows that volatility is picking up again and both sides of the fence (bulls and bears) are battling hard.

The CPI report came in a little higher than estimated (slightly inflationary), but the interest rate sensitive bond market didn't seem to mind.  Why?  Because housing starts dropped 10.2% last month to 1.19 million units, which is a 14-year low. Building permits also sank 7.3% to 1.22 million.  These negative numbers outweighed the rise in the CPI putting another interest rate cut by the Fed back on the table. 

So today was a battle between negative economic data and positive earnings reports.  The reports will continue, and with this being an options expiration week, the volatility should also continue.

Today Sentiment Survey is on the right side of the homepage.  Are you bullish for next week, or bearish?  Let us know.

That's all for today.  See you tomorrow. 
 

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