Monday, October 2nd, 2017

Current stock market?Hanging by a thread

Stocks closed just above their 200 day moving averages. $SPX and $RUT both have been sliding for the whole month of July as doubts about economic recovery and wall of worries have started another depressive mood on the Wall street. Fundamentally it was the job report last Friday that set the somber mood. In this jobless recovery people have doubts if there is going to be a recovery at all and when will that come. The basic fundamentals are driving the technicals and we can see how that went this week. Selling and more selling. We have seen these negative moods last year where selling climaxes and everyone throws in the towel and the market puts in a bottom and goes up higher. That is the turning point.

Today’s closes have a hanging man  or  long bottom tailed candle on both $SPX  and $RUT. These are broad based markets and certainly the charts tell a story. Click to enlarge chart.

SPX , NDX, RUT all have tested their moving averages. SPX slid below its 50 day moving average after the golden cross and had no problems penetrating 200 day and closing below it. Than in the last half hour of trading there was a market rally fueled by short covering that drove the index clearly above its 200 day average. NDX tested its 50 day since March and bounced off. All major stocks did the same .  $GOOG sliced below its 50 day and 400 milestone, yet recovered strongly and closed above 400.  $BIDU touched its 50 day MA first time since February 2009 and is now bouncing off of it. $AAPL and $GS both went near 50 days and  moved higher.  Since we had such a run up in recent months if a commodity price goes to its 50 day moving average after a long bullish run, its considered healthy, and  that is where the buyers step in who have not bought it yet, and it push the stock prices higher.

The fate of the stock market still is bearish and we might see sharp rallies to the upside here, but unless SPX goes higher than 520 and starts making higher highs expect a downturn to continue. The trend is clearly downward as the downward sloping 200 day moving average and may break it here or at some point. Caution is needed.


2 Responses to “Current stock market?Hanging by a thread”
  1. bluerickshaw says:

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  1. […] proved to be just the straw that broke the camel’s back. Now we could be in for a 5% to 10% correction in SPX and this can last from 5 to 15 days easy- unless the market bounces back on some good news right […]

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