Stock Market Week in Review:
Nothing more perfectly highlights degree to which markets have been stubbornly range bound this year than the stock markets sell off and rebound last Thursday and Friday.
The DJIA and S&P 500 did a total retrace of Thursday’s losses, each gaining 1% on Friday, finishing the week with fractional losses of -0.3% and 0.4% respectively.
DJIA Daily Chart
NASDAQ, while managing to retake the 5000 level, only recouped 75% of its decline the prior day as numerous Social Media names are in the throes of a valuation correction/wake up call.
The Russell 2000 +0.6% at 1228, continues to be flash the most caution, recovering less than one third of its losses from Thursday, and ending the week -3%. Maybe a bit encouraging that the Russell held the 1220 level intraday, 1219.11 was the December 29 closing high at year end, and the high water mark until a string on new highs the last 2 weeks of February.
If we get a further bounce this week, keep an eye on the 1242 level which was the March 2 closing high.
Market Internals last week were likely influenced by some end of the month capitulation following 2 weeks of nonstop unwind trades in the US dollar, interest rates, the German Dax, and the continued rally in crude oil.
Thursday, the Adv/Decl was negative by 4.5 to 1 in both the NYSE and NASDAQ markets. A good trading plan will have trade criteria for this bearish market breadth.
In the rebound rally Friday, the a/d stats were positive by barely 2 to 1. Was the disparity a result of end of the month “flushing out” of under performing stocks?
Or was the Friday rally merely due to beginning of the month cash flows taking advantage of a stock market that was slightly oversold in the short term?
With the market poised for a higher opening to start the week, the substance behind the rally to start the month will be tested in short order.
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