Stocks rallied on Monday after a strong retail sales report and a decent earnings report from CITI. The bears weren't totally absent as they tried to push the indices into negative territory during afternoon trading, but buyers stepped up again and the Dow and S&P 500 closed strongly. The Dow gained 146-points.
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Volume wasn't all that impressive which makes me think that this could just be a typical pre-holiday reversal from the bigger trend, during an options expiration week that is historically pretty strong. If this market is really going to turnaround, we'd want to see some follow-through for a couple of days with volume picking up. Janet Yellen speaks on Wednesday and that has the potential to not only be a market mover, but a pivot point for the stock indices which are threatening to correct (10% or more).
The SPY (S&P 500 / C-fund) created a positive reversal day and it was nice to see a strong close again. The market was due for a bounce and a two or three day rally may not tell us all that much. But if the 50-day EMA and the old support line can be recaptured, that would be saying something.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 posted a decent gain and the intraday sell-off yesterday did hold at Friday's low. As I mentioned above, the volume was not very impressive which means that the larger money managers may not be interested in buying yet. Perhaps it is due to it being a holiday week, but we saw similar relatively light volume last week on up days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 broke below a long-term rising support line last week and now it is resting the 200-day simple moving average. It temporarily dipped below it during afternoon trading on Monday, but managed to close above it. This would be a nice place for it to find some support and resume its bull market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were slightly lower yesterday and the pre-holiday trend reversal may be at work here as well. Bonds were moving up leading into this week so a little pullback may not be surprising.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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