The stock market did bounce today after a sharp three day sell - off. Although there was
heavy short covering ahead of tomorrow's FOMC meeting, there was enough volume to
indicate new money buys. It is interesting to note that, once again, the SPX bounced off
the +5% line of its 200 day m/a oscillator. This represents the sixth bounce off that line
(or a little above it) since early last year when the powerful 30% run was unleashed. See
SPX vs. 200 Day m/a Oscillator
Below, there's a link to the daily SPX plus indicators. The market is in a confirmed short
term down trend with roll overs in the 10 and 25 day m/a's. But remember the SPX did
bounce off the +5% line against its 200 day m/a and note too, since the outset of last year,
SPX downturns have been reasonably well contained around the 100 day m/a. SPX Daily
The chart also shows that over the past year or so sell - downs in the SPX have been
contained in the 30's on RSI and near -10 on MACD. Torturing the data like this is no fun,
but it is important to look carefully to see if this very strong, nearly 14 month trend up is
finally in peril or not.
The guys did jump the gun on the FOMC meeting and break the tight consolidation in
place leading up to the meet. That was a mild surprise given how well the SPX held up
after making the double top up around 1848.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!