Stocks opened sharply lower on Wednesday morning but it didn't take long for the buyers to step in and buy the dip to follow through on Tuesday's late dip buyers. The Dow turned a 120+ point early decline into a 2-point gain by the close, with small caps outperforming again, and the I-fund lagging.
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The selling started overnight after a weak PMI report out of China, although China's market didn't react much and barely gave back any of the 3.34% gain it had on Tuesday. To be honest, I don't know if the report came out before, during, or after their market was open.
There are a lot of concerns out there so this market seems to be proverbially "climbing the wall of worry." We have the British vote on the Brexit this month, an ECB meeting later this week, the Fed later this month, and they could be on the verge of a rate hike. There's a big OPEC meeting today, GM came out with an 18% decline auto sales in the last quarter, oh and the May jobs report comes out on Friday. That's a lot to worry about and so far the market is shrugging it off.
As mentioned, on Friday morning we get the May jobs report and estimates are looking for a gain of 155,000 jobs, and an unemployment rate of 4.9%. The Jobs Report Contest is now open in the forum. Click here for more info.
There are a lot of concerns out there so this market seems to be proverbially "climbing the wall of worry." We have the British vote on the Brexit this month, an ECB meeting later this week, the Fed later this month, and they could be on the verge of a rate hike. There's a big OPEC meeting today, GM came out with an 18% decline auto sales in the last quarter, oh and the May jobs report comes out on Friday. That's a lot to worry about and so far the market is shrugging it off.
As mentioned, on Friday morning we get the May jobs report and estimates are looking for a gain of 155,000 jobs, and an unemployment rate of 4.9%. The Jobs Report Contest is now open in the forum. Click here for more info.
The S&P 500 (C-Fund) has been holding up well of late but has continued to struggle at the head test of the head and shoulders pattern, and the bulls probably don't want to get too comfortable until that head test breaks to the upside. The bears are getting their chances but have not been able to get any traction as the dip buyers have been able to remain in control for now.
The DWCPF (S-fund) made a new intraday and closing 2016 high yesterday as the small caps show some decent recent relative strength.
The Dow Transportation Index was down sharply early yesterday but rebounded and closed with a modest 0.32% loss, creating a positive reversal day, but that loss pushes it back below the 200-day EMA.
The EFA (I-fund) was down slightly and after a brief intraday break below the 200-day EMA, closed just north of it again. That's the 5th close above it in a row, which is usually a good sign technically.
The dollar was down but it didn't seem to help the I-fund yesterday. It looks like it wants to fill that small open gap, but whether it is peaking here is too early to say.
The AGG (Bonds / F-fund) gave back Tuesday's gains on Wednesday, keeping the bear flag intact while the 50-day EMA continues to hold as support.
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Tom Crowley
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