Stocks fell sharply on Thursday, but managed a modest come back by the close and some indices produced positive reversal days. The Dow lost 167-points, about 50-points off the low, while the small caps grabbed back 2/3 of the big morning losses creating a nice reversal. But the losses were still stiff by the close in most indices.
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The I-fund led the way helped by the dollar's negative outside reversal day.
The SPY (S&P 500 / C-fund) lost 0.9% on Thursday but it found support at the 50-day EMA - like a bull market should, and created a nice kangaroo tail reversal similar to what we have seen several times in the last couple of months - All of which saw rallies back toward the highs. The bad news is, it closed below the neckline support so the reversal needs to follow-through on Friday and push it back above that support line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 (QQQ) closed below the 20 and 50-day EMAs, but the reversal at the rising support line looks promising - at least for the short-term.
Chart provided courtesy of of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 closed below the 200-day EMA for just the second time but the positive reversal day could be another short-term low and the 200-day EMA could be recaptured today.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The market leader Transportation Index has remained relatively healthy although the failed breakout earlier this week from the inverted head and shoulders pattern is a black mark, but the big rebound at the 20-day EMA is about all you could have asked for on a day like Thursday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were up sharply again. That's not as surprising on a day when stocks are down sharply, but the trend remains stubbornly higher in an economic environment that is supposed to be improving.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Moves like this that are not easily explained (the Fed? Russia?) have a tendency to come before a big event. On the whole, the stock market is not confirming this, although the Nasdaq and the Russell 2000 may disagree.
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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