Modest rally
Stocks fluctuated sharply on Monday as
we saw an early 140-point gain in the Dow turn into a 35-point loss by
early afternoon, but by the close, the bulls took it back into positive
territory ending the day up 76-points.
That certainly beats a sharp stick in the eye, but after Friday's 250-point
selloff, the bulls were hoping the early gains held up a little better.
S&P 500 closed higher by 0.6% but made a lower low and remains below
both the rising support line (day 4) and the 50-day EMA.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
The economically sensitive Dow Transportation Index, which we are watching
closely, did fall through the 200-day EMA intraday, but managed to close
back above it.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
If it can find and hold support here, that
would be a great sign.
The 10-day moving average of the NYSE ARMS Index is at 1.51, an area that
has produced short-term bottoms this year.
Charts provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
You can see above that this indicator had no problem going below 1.50 during
the bear market, so it may be now or
never for the market to
continue this longer-term bull run.
Oil has pulled back to the old resistance area
and, as we speculated back on the 20th of October, we
think it might hold here.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
We could see a new leg up but I think the dollar might have to cooperate as
it could be tough for oil to go up if the dollar rallies and stocks fall.
The irony is, higher oil prices could indicate a stronger demand, which is a
good sign for the economy. But high gasoline and oil prices slows down
consumer spending. The chart tells us that oil prices will likely stay
above $76, but if the stock market does continue to sell off,
I'll be surprised if it does stay above $76.
That's all for today.
Thanks for reading. We'll see you back here tomorrow!
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