On Friday the popular averages closed mixed as October options expired. Procter & Gamble (PG +8.8%) boosted the Dow Jones Industrial Average following its report of strong sales growth. Conversely, eBay (EBAY -8.9%) dragged down the Nasdaq Composite after a downgrade by Stifel Nicolaus in expectation of weak merchandise volume. The selling of used houses slowed more than expected in September. Meanwhile the price of crude oil rose while that for gold fell on Friday.
Above is my 3-month chart of the S&P 500 exchange traded fund (SPY). The drop in June seemed to have been due to trade war fears. The upward trend during much of July and August apparently ignored those concerns.
Slippage by the SPY during early autumn is rather common, especially when moving toward mid-term elections in which members of Congress in the same party as the president are viewed as vulnerable.
The SPY closing under its 50-day moving average last week on Tuesday and then forcefully under its 200-day MA as quickly as Thursday was concerning. A jump up in interest rates amid an unending tariff war scared many risk averse investors out of the stock market. On Friday last week many risk taking traders bought what they perceived as bargains in stocks. Monday selling made the bounce somewhat suspect. Then on Tuesday the SPY impressively shot well above its 200-day MA. After the an essentially flat reading on Wednesday the SPY plunged again on Thursday to close just under the 200-day MA where it remained on Friday. A bottom may have been set last week, but it’s too early to declare that as established.
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.
Updated following each market day
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