Stocks pulled back yesterday as the trouble in Japan continued, the European markets sold off, and the tax inversion talk stirred things a bit too. The Dow lost 134-points on the day, which was rather modest considering the damage around the globe. Oil rebounded but remains in a short-term downtrend.
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I have been having serious internet connection issues for a couple of days now and right now it's bad so I am going to make this quick to dodge the interruptions. I have a new modem arriving on Friday but hopefully it won't be this bad until then.
The S&P 500 (C-Fund) closed below some key support but the 1% loss didn't do any "major" technical damage. The bears have been given a bone here. The question is, will they take it or will the bulls fight right back?
The Small Caps (S-fund) gapped down and now it is a confirmed failed breakout of the 200-day EMA. The bears won this small battle but the bulls have been winning the war lately.
The EFA (EAFE Index / I-fund) opened sharply lower creating a large open gap. It also closed back below the 50-day EMA for the first time in almost 6-weeks. The failure at the 200-day was the first warning sign, and now the 50-day EMA?
The major overseas indices are also struggling. Japan's Nikkei is looking to potentially test the 2016 lows, and the trend is negative at this points since it wasn't able to make a higher high.
The German DAX also fell back below the 50-day EMA after failing at the 200-day EMA last month. I don't know how much this will impact the U.S. markets, but this can't be good.
The AGG (Bonds / F-fund) was up but closed well off the highs. It remains in a very tight rising trading channel since breaking out late last month.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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