Last week, the S&P negated its very short term uptrend and reverted its 100 DMA from support to resistance. Most important, it is now in a challenge of its 200 DMA. It broke below this support level on Thursday---a support level, by the way, that has been challenged multiple times over the last two years and held. On Friday, the S&P closed right on that MA, which in my time and distance discipline, stops but does not reset the clock. In other words, if it closes below the 200 DMA today, it will restart the clock (which means Monday will be the second day of the break); if it closes above the MA, the break will be voided. So on a short term basis, the S&P is at a critical technical level. Today’s pin action will tell us a lot. Incidentally, the Dow closed above its 200 DMA, negating Thursday’s break which is a mildly positive indicator for what the S&P might do today.
The long bond had one good day (Thursday) last week in which its role as a safety trade seemed to kick in. However, it was unable to rise above the lower boundary of its former intermediate term trading range, lending strength to the new downtrend. It is also it remains below both moving averages, in a short term downtrend and in a newly reset long term trading range. In short, it looks like more downside in prices.
The dollar sold off last week though it was up on Friday. It remains strong technically; but I was a bit mystified by its decline on Wednesday and Thursday since it is usually associated with a safety trade.
GLD exploded upward on Thursday on huge volume, challenging a six month losing streak. If it manages to stay above the upper boundary of its short term downtrend on the close today, it will reset to a trading range. While it might be relinquishing the title of ‘ugliest chart on the block’, it is still no time to get jiggy.
The VIX soared last week closing above both moving averages and resetting its short term trend from a trading range to an uptrend. Not a good sign for stocks.
News on Stocks in Our Portfolios
This Week’s Data
September retail sales rose 0.1% versus expectations of up 0.6%; ex autos, they were -0.1% versus estimates of +0.4%
The October NY Fed manufacturing index came in at 21.1 versus consensus of 18.8.
Update on the used car market.
What I am reading today
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