Stocks opened slightly higher on Wednesday after a wild night in the futures market Tuesday, which had the major futures stock indices down about 1% before rallying back into positive territory by the open on Wednesday morning. But the selling started and leaked into the cash hours trading and the indices ended the day with modest losses. The Dow gave up 51-points, after being down 118 at the lows, in another light volume trading day.
The wild futures trading Tuesday night / Wednesday morning was caused by the weakest manufacturing report out of China in six years. China's Shanghai lost 2.2% while Japan's Nikkei has been closed for a few days.
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Modest losses in all three stock funds and bonds were basically flat on the day.
The SPY (S&P 500 / C-fund) attempted to fill the small overhead gap (red) but there is a little more work to be done there. There's not much overly bullish about this chart except that yesterday's selling was on very light volume so I'm not sure what the bears are waiting for. A test of the lows would be ideal technically, but it has been a month to the day that we saw those lows so again, where are all the bears?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) is broken but with the open gap above, it could go either way in the short-term. Technical analysis would suggest that the lows need to be tested, but is that getting too obvious?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) is basically testing its lows now. This could be a big bear flag, or it could be a successful test here so... stay tuned. This could be a tell for the other indices.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
China's Shanghai was down 2.2% on Wednesday and what I find interesting or amusing about this chart is that the latest small black candlestick (near blue arrow) represents a 2.2% move. It almost looks like it was a flat to slightly lower day, but that's how volatile this index has been.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil was down over 4% yesterday so again stocks seem to be following what crude oil is doing. The bull flag is getting a little long. We're watching the 44 and 48 levels for breakouts in either direction.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Today is trading day #17 on the September seasonality chart so we've passed the worst of September. The 53% positive days are about what any random day would be but day #19 has a good historical record at 63%.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was basically flat as bond traders try to figure out if they should be buying stocks or bonds. Everyone seems a little hesitant.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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