(Note: I'm still on semi-vacation. Posting will resume its normal pace in September.)
Well, it was another very volatile week in the markets. We had what looked like a solid reversal day on Thursday but futures were getting crushed in the pre-market on Friday. Then the Plunge Protection Team (aka the Federal Reserve) went to work and lowered the discount rate by 50 basis points. That gave the market a quick boost and certainly hurt a lot of bears. It's interesting to note though that the indices generally closed below their opening levels. So there was no follow-through buying after the pre-market pop... not even panic buying from surprised bears. Options expiration probably played some part in Friday's action as well. It'll be interesting to see whether we get any follow-through next week.
Despite the wild swings during the week, here's how the indices performed for the week: Russell 200 was down 0.35%, S&P 500 was down 0.53% and the Nasdaq was down 1.57%. Doesn't seem like much happened when you take the weekly view.
The Nasdaq continues to flirt with 2500 and its 200-day moving average. The high downside volume has finally caused that bullish on-balance volume divergence to disappear. There's a clear pattern of lower highs and lower lows, so bulls will want to see that pattern broken.
I'm showing SPY instead of $SPX in order to show the Friday gap and the true intraday action -- a close below the open. The S&P 500 got a big bounce off of its March low. Let's see if it can get back above its 200-day moving average.
The Russell 2000 keeps failing at its 200-day moving average.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Lat | Lat | Lat |
| Intermediate | Down | Down | Down |
| Short-term | Down | Lat | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
According to Zweig's Super Model, the market is rated as Buy again (due to the lowered discount rate). While this is very positive, the 4% Model is still on Sell. So, if the Value Line Index rises 4% from it's recent low, we should once again witness a healthy uptrend.