Coolhand's Market Analysis

It was another down week last week, unless you were in the I or F funds. But the good news is that there were two upside reversals last week that are highly suggestive of a bottom being in.



The S&P 500 shows us that price gapped lower last Wednesday, breaking and closing well under the 50 dma. But then we see two back-to-back rallys that erased a good portion of Wednesday's losses and that puts price with striking distance of overhead resistance once more. Momentum has turned up and price is back over its 50 dma.



It's a similar story with the DWCPF, but price has more work to do as it remains below its 50 dma. Still, there is a modest upside bias over the past 3 months or so, though we have had to endure significant volatility in that time. Volatility is often the nature of small caps, as this index is heavily influenced by the Russell 2000.



This is a fund that has been surprising a lot of folks. Yes, it hit a fresh high again on Friday. On volume too.



Generally, you want to see banks doing well in a bull market, but the 50 dma has been trending lower for several weeks now. Support is still holding, so we'll see how it goes.

Breadth and liquidity are bullish. My intermediate term system remains positive. The TSP Talk sentiment survey stayed neutral last week and NAAIM remains bullish. While there are plenty of reasons to be concerned about this market, the main indicators I follow tell me to stay long even as I have had to endure draw downs. Last week's reversal looks bullish to my eye and probably marks a bottom.