The nerves show
The Fed was scheduled to announce the results of the bank stress test
after the close yesterday, and the nerves kicked in sending the major
indices down sharply during the day.
Although the results were basically a foregone conclusion, there was always
that chance that there could be a surprise.
They eventually determined that 10 U.S.
banks need to raise a total of $74.6 billion in capital. Ben Bernanke
said this should reassure investors of the soundness of the financial
system.
Good news, but has the market
already priced this in? I still think we could see a "sell the news"
reaction, even though the news was good. But at this point, nothing
would surprise me.
The S&P 500 put in an outside day where yesterday's high was higher than
Wednesday's high, and yesterday's low was lower than Wednesday's low.
Since it closed near the lows, this could be interpreted as a reversal day,
particularly with the very high volume, but with the stress test results
last night, and the jobs report coming out this morning, anything could
happen.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
The Nasdaq, one of the market leaders, has been lagging the last couple of
days as it lost 2.4% yesterday after only a small gain during Wednesday's
100-point gain in the Dow. It remains in the ascending trading channel
but is testing support again.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
The other leader, the Dow Transportation Index, also put in a reversal day
after it ran up early yesterday, right into the 200-day moving average,
before reversing downward and closing near the lows. It had broken
above the recent trading channel but closed back down into it.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
A quick look at the put / call ratios
continues to show the dumb money embracing the rally, while the smart money
is getting more defensive. It's been the same story for several weeks
but how long can the dumb money be right, and the smart money be wrong?
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
I will be on the road most of the day
today, but as always, I will try to respond to any email I receive by the
end of the day (late Friday).
That's all for today. Thanks for reading! Have a great weekend!
|
Printer friendly