Updated following  each market day

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Market Outlook

The popular averages closed to the upside for a third day on Thursday. The Dow Jones Industrial Average and the S&P 500 both achieved all-time closing highs. Weekly jobless claims declined. The Philly Fed index is strong. Home construction slowed in August. The Chinese central bank lowered its interest rates to commercial banks. After the US market close, the IPO for the Chinese e-commerce firm Alibaba was priced at $68. Meanwhile, we are awaiting the results of the Scottish secession vote. The prices of crude oil and gold fell on Thursday.

   Above is my 3-month chart of the S&P 500 exchange traded fund (SPY). It was soaring in February following a January pullback. After a new high was recorded in early April, another drop occurred as newsletter writers were warning people of a bubble that could burst. That April drop beneath the 50-day moving average was quickly erased. Money moving out of stocks and into bonds led to more tests of that moving average before a nice rise to record highs commenced.

   The down-thrust amid high trading volume on July 31 shoved the SPY beneath its 50-day moving average. That caused my outlook arrows to briefly retreat to neutral. During the first week of August the price move alternated each day with the net result a slight gain and repainting my weekly arrow green. On both August 14 and 15 the SPY closed virtually at its 50-day MA. That allowed my monthly arrow to join my weekly arrow. The sharp move above that level on August 18 sounded the all-clear for all of my time frames. The emphatic bounce above the 50-day MA on Tuesday and continuations on Wednesday and Thursday to a record high have been encouraging.

DISCLAIMER: Our commentaries are provided as general information and not investment recommendations. You are responsible for your own investment decisions. Our opinions are based on historical research and data believed to be reliable. There is no guarantee that results will be profitable. We are not responsible for errors or omissions. We may hold positions in vehicles that are mentioned.

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