There was a late morning scare where the early 200-point gain in the Dow was wiped out and turned into a 100-point loss, but the dip buyers of 2017 were right there to do what they have been doing for the last 15 months.
The S&P 500 / C-fund had moved back above the important 50-day EMA and it is now 7.9% above last Friday's low. That's quite a quick recovery after an historically fast 10% decline. Now it gets interesting.
I've posted this before where, in 2015 and 2016 we had our last 10% corrections. Both rallied about 8% before pulling back again and retesting the lows.
That's not always the case. There are rare "V" bottoms, or we could get something in between like we saw in 1997 where a quick correction down to the 200-day EMA was followed by an 11% relief rally, then a pullback that did not come all the way down to test
Another reminder that the February seasonality chart is actually playing out rather close to the averages. The latter half of February, beginning on the 16th, is historically weaker than the first half, while the
previous 5 days were obviously strong.
Chart provided courtesy of www.sentimentrader.com
financial markets will be closed on Monday, February 19 in observance of the
Presidents' Day holiday. The Thrift Savings Plan will also be closed.
Transactions that would have been processed Monday night (February 19) will be
processed Tuesday night (February 20), at Tuesday's closing share prices."
The small caps / S-fund also moved above its 50-day EMA after its explosive reversal off the 200-day EMA.
The Dow Transportation Index has had a steady, measured rally of its lows, but this one more so than some of the other charts, looks like a potential bear flag, which of course tend to break down. Still, it could turn out to be a "V" bottom since the angle off the lows is on the steep side.
The EAFE Index / I-fund gapped up on Thursday while attempting to fill one of its many overhead open gaps. It is still below the 50-day EMA and the German DAX chart (not shown) is still struggling below the 200-day EMA.
The AGG (bonds / F-fund) was up nicely but this chart is still struggling. The early higher gains on
Thursday filled an open gap before pulling back again to close with modest gains.