Market Madness Daily Market Update - 3/21/12

Daily Stock Market Update and Index Charts for March, 21 2012

US indices traded around their flat lines for most of the day today with the conclusion being mixed results at the closing bell. The DOW saw the most downside pressure with a close at 13124 for a 45 point, -0.35% loss for the day. The S&P 500 index (SPX) fared a tad better losing just 2.63 points to close at 1402.89, a -0.19% loss. While the tech composite (COMP) did even better finishing just on the other side in the green for a 1.17 point, 0.04% gain for the day to close at 3075.32. A relatively calm day today, our volatility measure, the VIX, gave up about half a point to close just above 15 at 15.13, a 2.89% decline.


Moving on to our charts today first up is the S&P (SPX). Unsurprisingly technicals deteriorated somewhat today with MACD further declining and both trend and momentum indicators losing some ground across the board. Our multi-stochastics indicator, however, has not yet confirmed its turn out of overbought territory. Right now most evidence seems to point towards this being a "cooling off" period before the next leg rather than a full-on profit taking situation. Of course, anything could happen tomorrow as we all know all too well.

The small cap RUT index "outperformed" today by actually gaining a little ground. A very very little ground. Now right back in its long-standing channel this index has a bit of work to do before undoing the technical damage caused by Tuesday's losses. Assuming it can overcome those obstacles the RUT should still be in a good position for relative outperformance. We'll need to see either this 820-830 area successfully tested as new support or a convincing break of its recent highs to get back on the bull side of this trade. Overall technicals did worsen for the index despite the meager gains.
MACD fell a bit farther today but the RUT : COMP ratio flattened out a bit which certainly could be a positive if followed through on. Our multi-stochastic measure, however, is on the verge of confirming its rollover out of overbought. Which could actually be a good thing--relieving that pressure--if this is the worst of it, or at least close to the worst of it.

The semiconductors truly did "outperform" today. The SOX index posted gains of 1.65 points to close at 437.19. A gain of 0.38%, besting its peers by a wide margin. We remain relatively bullish on this index if it can crack that resistance at 440. Technicals here were mixed today and provide little insight overall. MACD deteriorated a bit, stochastics continue to turn out of overbought, and the SOX : SPX relative strength measure showed improvement. Both trend and momentum indicators of a wide variety are showing mixed results and right now price action is the very best indicator for this index (well for any index any time, really).

Still not feeling well so that's it for today folks!
Stay safe out there!

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.

Market Madness Daily Market Update - 3/19/12

Daily Market Update and Commentary for March 19, 2012


Another day in the green for the major indices today.

The DOW had the weakest showing with a paltry 6.5 point, 0.05% gain to finish at 13239 at the close.
The CBOE Volatility index (VIX) advanced today despite the gains in the SPX with a .57 point, 3.94% move up from its very low levels to close at just over 15.

The S&P 500 had a much better showing than the DOW and was up almost 10 points late in the day before settling down a little to finish at 1409.75. A respectable gain of about 5.5 points, or 0.4%. The index backed off its highs after approaching the top of our ascending wedge formation but it is quickly running out of room and this will resolve one way or another imminently.

Technicals further improved with MACD gaining more ground and the SPX : RUT moving lower once again. A positive for continuing market strength. Stochastics remain in overbought territory on the daily time frame but show no signs of rolling over yet.

The start of the show today was, of course, the small cap RUT index. We've been increasingly bullish on this index starting after the first week of March (see here, here, here, etc.) and its break today of that stubborn upper channel resistance may bring a new phase to this rally. It should, at the very least, now have a solid base of support around the 830-820 level. For the day the index saw a gain of about 7.5 points, 0.91% to close at 837.77.
A handy outperformance of its major peers.

We love this index under any conditions of continuing overall market strength and it has a high probability of continuing outperformance of its peers under this scenerio.

The semiconductors (SOX) also performed admirably today with 0.75%, 3.28 point gain to 438.69 at the close. We've been constructive on this index as well lately (here, here) but this one is now sitting right at technical resistance. If, however, it can break convincingly through that 440 mark it too should have some more room to run for relative outperformance. Technicals also saw improvement here today with both MACD and Stochastics registering gains.

Take care and stay safe out there!

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Market Madness Daily Market Update - 3/16/12

It was a relatively uneventful day for the major indices with flat finishes across the board with slightly more selling than buying taking place. Our Friday update will therefore be brief as usual and we'll see you back here on Sunday for our Weekly market updates and index charts.


Have a great weekend!


The standout winner of the day was Bank of America (BAC) with a 6% gain of 58 cents to close at $9.80. It was just four short days ago that this stock was at $8. That's a gain of  %22.5 in four days! Incredible. And there couldn't be a less deserving company (well OK, there probably could be a less deserving company out there somewhere...)


The DOW shed about 20 points to close at 13232 for a 0.15% loss for the day which tracks right with other indices. The tech composite (COMP) gave up a little less barely even registering a loss at -0.04%, or 1.11 points. The VIX on the other hand plunged again today, losing almost a whole point from its already historically low levels to close at 14.47. A loss of over 6%. As noted in updates of the last few days this has begun to put into serious question our view in prior weeks of a VIX bottoming process. Time to reevaluate.

Charting only the S&P 500 (SPX) and Russell 2000 (RUT) today first up is the SPX. Finishing barely in the green today with a 0.11%, 1.57 point gain this index remains quite healthy. If positive sentiment continues there is no reason why the index shouldn't go on setting new highs for the time being. There is certainly little technical resistance to doing so. MACD further improved on the daily frame while our MultiSlow-Stochastic readings appear to be turning in agreement with each other. That latter could be a sign of impending correction of some sort and indeed, we do find a modest correction down to the major trendline/2011 highs to be the most likely outcome.

We pointed out yesterday that the RUT was right back at its upper channell resistance yet again and that this has been a big challenge for the index. And once again, we pulled back off that resistance to close lower by 0.15%, or 1.28 points. Between the small magnitude of the loss and today's environment of overall market weakness we can't learn anything from today about the likely relative performance of this index going forward. Monday should provide more clarity on the situation.