Market Madness Market Update - 3/26/12

A spectacular day for US indices. Even though we're not doing market updates anymore today was too good to pass up.

The S&P 500 today took back all of its losses of prior days and more. The index closed at its highs of the day on some last minute buying acceleration to finish at 1416.5, a new high. Wedge resistance is coming up at around 1425 but it's getting narrow here and soon it will resolve and break on way or another. Probably for a correction downward. The market sure does seem to have one coming after a move this large, and this fast.

We were bullish on the semiconductors is some of our last updates and today it finally broke resistance at 440. If bullishness in the general market continues this index very well could be set for some great gains.

And by far the biggest winner of the day, the small cap RUT index. Bye bye you cruel channel. This is going to be the place to be if market strength continues. We've been saying that for awhile now and it has been true for awhile now. Even Goldman Sachs has picked up on it and jumped on the Market Madness bandwagon (OK OK, so maybe they came to their own conclusions based on their own analysis and aren't actually reading our blog...)

That's it. Just had to post those lovely charts and say a quick word. I'm NOT doing market updates anymore, I swear.

Market Madness Daily Market Update - 3/20/12

Market Update and Index Charts for March 20, 2012

Due to a nasty cold we're going to attempt to keep it very brief today.

US markets pulled back a bit today with the DOW losing about -.5% to close at 13170 and the S&P 500 giving up just over 4 points, or -0.3% to close at 1405. The tech composite (COMP) shed a mere 4 points -(0.14%) to close at 3074. All closed well off the lows of the day after a morning gap down followed by steady improvement through the rest of the day.

The SPX pulled back from the top of its ascending wedge formation this morning but fought back up to close well within Monday's range. That's a plus. On the negative side, however, the narrowing of losses throughout the day was not enough to prevent some technical weakening. MACD flattened out, the SPX : RUT relative strength ratio turned up, and stochastics started to turn out of overbought territory. None of this is damage that couldn't be undone with a strong day or two.

The small cap Russell 2000 index (RUT) saw the worst of it and did not recover from the morning gap down nearly as well as other indices. For the day it posted a loss of over 1%, or 8.53 points to close at 829.24. Right back inside that long-standing channel. The big question now is: will this level now provide some support? Technicals took a fairly sharp turn for the worse today with MACD turning down and the
RUT : COMP ratio continuing its decline. Stochasitics also rolled over steeply today but are not yet all in agreement. We should get more clarity very soon.

Is the VIX bottoming thesis dead? (long live the VIX bottoming thesis?)
Well we report you decide but it looks like a distinct possibility. Personally we would need to see a fairly sharp move up to above the red line there around 19. And we would need to see it relatively soon. Like by the end of next week tops.Failing that occurring we would be very cautious on drawing any conclusions at all from VIX action in the near future. The VIX gained about 4% again today with .56 point rise to close at 15.60. That is a rise of about 14% from its lows but at these extreme lows moves of that magnitude--in both directions--are not uncommon at all and really do not impart any useful information.

UGA Charts and Analysis - 3/16/12

UGA Gasoline Fund - Charts and Technical Analysis

March, 16 2012
After its most recent breakout the US gasoline fund, UGA, had entered a period of consolidation beginning near the end of February and looks set continue with sideways its price action. While most indications are that we are in for another period of volatile but sideways movement (potentially building another solid foundation for a new rally) one thing this chart does have going for it is the move off of channel support today. This keeps us inside that trend channel and in sight of challenging those recent highs.If it can break those highs then all bets are off and we very well could see a strong move up from there. Our projection, however, remains for consolidation to continue at this level for at least the near future.

MACD continues to weaken and our Multi-Slow Stochastic measurement is both mixed, and near the middle of its range, suggesting neither weakness nor strength and instead implying sideways price action is most likely.

Stay safe out there!

And as always, Market Madness welcomes your thoughts!