Stocks pulled back again on Monday with some light buying into the close to take the indices off their lows. The Dow, down 137 at 3 PM ET, closed down 85-points. We saw some cracks in the charts but the strength into the close helped keep them from breaking down.
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Deutsche Bank was up yesterday but the chart is in awful shape with some room to move higher into an open gap before hitting serious downside bear market resistance near 14.50. If it can get above that it would likely mean more help from the Central Banks, and that could provide a catalyst for a global rally in stocks. If, if, if.
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The SPY (S&P 500 / C-Fund) broke below the important rising support line and the only thing in the way of it possibly going down to test the September lows. But that late bounce put it back into the rising channel and could use some help here. The 3rd possible lower high gives the bears some fodder here, but the dip buyers continue to show up and that's the battle going on right now.
The DWCPF (small caps) was down again and is testing some possible rising support (blue) and the bulls are hoping we're looking at a bull flag (red) that will find support at the bottom of the flag near 1080, right where the 50-day EMA is also sitting.
The Dow Transportation Index broke out to a new 2016 high early on Monday, also moving above the shorter-term rising resistance line (blue), but it couldn't hold and it turned into a failed breakout. There's something positive happening here that give the market a bullish edge, but until it breaks out and holds, that edge will also be on hold.
The dollar broke out of a pennant formation which hurt the I-fund and did you see the price of gold fall over $40 an ounce on the day? Interesting. The gold and bond safety play was once again not an option for investors on a day when stocks declines.
The AGG (Bonds / F-fund) fell sharply yesterday and filled that open gap and is nearing the lower end of its trading channel.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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