The popular averages plunged downward on Tuesday after US 10-year bond yields rose to 3%. Caterpillar (CAT -6.0%), 3M (MMM -6.8%) and Lockheed Martin (LMT -6.2%) weighed on the market due mainly to negative guidance during conference calls following earnings reports.


   Consumer confidence was already at a high level and has unexpectedly risen this month. The number of new home sold unexpectedly increased in March, after overall prices increased in February. 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 exchange traded fund (SPY). The strong upward move of the SPY in 2017 with acceleration this January was due for a correction, and it was hit by one in early February. A repeat was attempted while February transitioned into March, followed by another one from March 12 though 23. Then for a week the SPY price bounced up and down wildly, while the 200-day moving average appeared to provide support.


   That support gave way on the April 2 before recovery on April 3. Then came the big drop at the opening on April 4, again beneath the 200-day MA, before a steady advance back above and a nice gain into the close. The rise continued on April 5 before plunging back to touch the 200-day MA on April 6. On April 9 the SPY rallied strongly in the morning before giving back most of the gain. Since then SPY has been oscillating but with a net gain.


   The SPY escaped above its 200-day MA on April 10 and cleared its 50-day MA on April with continuation the next day. However, it closed back under its 50-day MA on April 20, then tested its 200-day MA on Tuesday. These levels have essentially contained the SPY since early February. A break one way or the other may be needed to recolor any of my outlook arrows.


   




















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© Curt Renz

  Stock Market Update

SMO - 1994 AUG 16

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