Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Quite a session Friday in one of the more violent movements up and down of the year – ironic that the indexes finished barely budged at the close after the whip saw action intraday. This also is leading to a very strange set of divergences in the major indexes. While we usually don’t showcase the DJIA it is worthwhile to look at now, as it is in a completely different place than the NASDAQ – while the S&P 500 is somewhere in the middle.
The Nasdaq looks the healthiest as it was rejected Friday at its accelerated trend line but still in good shape.
The DJIA on the other hand looks completely broken, it cannot even lift over its and is way below its 100 day moving average – this is one of the widest divergences I can remember between two major indexes.
Meanwhile the S&P 500 is sort of in the middle, as it was rejected at the 50 day moving average Friday but not the potential for a bullish MACD crossover if it can hold up here after last week’s rally. Getting over mid August highs in the 1670s would stop the pattern of lower highs.
So we can say a batch of mixed signals here.
Most of the key monthly economic reports were out last week, and it was a mixed bag – the two ISMs were good while employment disappointed. So now it appears people think taper…. but less taper (i.e. the amount of taper will be smaller). The Fed announcement later this month should be one of the more volatile. As for this week, retail sales Friday is the only key report with expectations of an increase of 0.5% in August, and 0.3% ex-autos. Some consumer sentiment and inflation readings also hit but less impactful.
Syria still hangs in the background as we saw Friday, but the market seems to be coming “to grips” with the idea there will be (limited) action.
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