Wednesday, March 14, 2012

Market Madness Daily Market Update - 3/14/12

Quick Headlines:
Commodities got whipped today with Gold and Silver taking an especially rough beating.
Big winners for the day included AAPL with a 21 point, 3.8% gain and BAC (ugh) with a gain of just over 4%

Major indices were both flat and mixed today with the one major exception being the small cap Russell 2000 index which gave up just under 1%. We'll get to that in more detail later on below with its chart. The DOW and the tech composite both managed to finish the day slightly in the green with gains of +0.03% and +0.12% respectively. Just holding on to the great gains of yesterday can be considered a big win for the bulls today.

Our first chart today is the SPX (which we prefer over using the SPY ETF as a proxy). The S&P 500 today shed just 1.67 points down to 1394 which, on a percentage basis, is exactly what the DOW gained, 0.12%.
This again can easily be seen as a win for the bull camp and in addition many technicals also continued to improve today. We feel that a correction down to the 1370 level is both probable, and important to building a new base from which to continue the bull run. A successful test and bounce up would be a strong sign of health while a failed test and break under would be more ambiguous. You can see our projection of the most likely progression from here drawn as the white lines in the chart below. Of course, it may also not even move to test that level and just continue on from here. We are also approaching the top of an ascending wedge formation. MACD confirmed its crossover today despite the minor losses but the SPX : RUT ratio reversed higher on the RUT's pronounced under-performance. 

 traderush binary options trading platform review

Which brings us to the RUT chart. We had mentioned yesterday that of all the major indices the RUT faced the most immediate potential for resistance. The index had finished the day yesterday sitting right below prior channel resistance of the last 45 days. And as noted in today's intro this index had by far the worst day of the bunch losing almost 8 points, for a -0.94% decline. Now sitting in the middle of that channel it would be interesting if it simply resumed its sideways movement from here. Despite the losses of the day it wasn't enough to negate the MACD crossover into "buy" territory. However, the RUT: COMP ratio (as previously mentioned) obviously reversed sharply lower on today's under-performance. This reversal was of a large enough magnitude to put into question the previously developing turnaround in that RUT : COMP relative strength measure.

We want to touch only briefly on the tech composite today. This index also experienced an MACD "buy" crossover signal today while our COMP : SPX ratio continued to climb. We are now, however, bumping right up against the prior trendline but this probably won't pose much problem if overall market strength was to continue.

The VIX rose moderately today with a 3.5% gain of half a point to finish at 15.31 at the close. MACD averages are also getting quite close to crossing above the zero line for the first time since December. The white line tacked on to the end of the price action in the chart below represents what we feel would constitute a breakout. If this move were to develop it would almost surely drag MACD lines above that zero line and we believe it could easily move very quickly from there into the mid-20's. If this move fails to materialize over the next two-weeks then our bottoming thesis would be in serious question and would need to be carefully reevaluated.

Stay safe out there!

No comments: