The popular averages closed to the downside on Tuesday. Home prices rose in August (good, I bought in July.) Consumer confidence has pulled back this month (election may be a factor.) Meanwhile the price of crude oil fell while that for gold rose on Tuesday.
Above is my 3-month chart of the S&P 500. The big jump following the Brexit scare in late June led to a more gentle rise beginning in mid-July resulting in several SPY records. Then came the huge drop on September 9 through the 50-day moving average amid heavy trading volume. This resulted in a big gap, i.e. the session’s high was significantly lower than the previous session’s low. The large jump in the VIX (volatility index) appeared to be a sign of panic. The sharp fall through the 50-day MA would not ordinarily be seen as a good sign.
The strong bounce on September 12 touched the SPY’s 50-day moving average but failed to fill the gap. Since then there has been a series of sharp moves in both directions creating a couple of smaller gaps. The SPY tickled its 50-day MA during several sessions in recent weeks without closing above. That barrier will have to be clearly breached before I can consider repainting any of my outlook arrows green.
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