The broad stock market indices are showing resilience following the initial post-Federal Reserve meeting sell-off. The S&P 500 Index, Dow Jones Industrial Average, Nasdaq Composite, and Russell 2000 Index are trading higher this week and well off last week’s lows.
The S&P 500 Index closed Tuesday higher by +0.51% and nearly triggered an overbought cluster. That said, it continues to have a weakly bearish intermediate posture.
The S&P 500 will likely see its posture move back to strongly bullish if it can break out to all-time highs in coming days (currently just 11 points away).
The Dow Jones Industrial Average was a laggard once again Tuesday, closing up just +0.20%. It continues to have a strongly bearish posture and is trading below a falling 30 day moving average. The Dow Industrials is typically down the week after the June expiration cycle (27 of last 31 years); after being up the first two days, it has a decent chance to buck that trend this year.
The NASDAQ Composite is still the leader, finishing up by 0.79% on Tuesday. It broke out to all-time highs and now has a strongly bullish posture and an overbought cluster. The NASDAQ also has a “3 Green Arrows” signal.
The Russell 2000 finished higher by 0.43%, it’s back above its rising 30 day moving average but still has a weakly bearish posture.
One of the big stories of the day was the volatility around Bitcoin; it dipped below $30,000 for the first time in several months this morning, but rallied back to close positive.
The U.S. Dollar fell for the second straight day, but remains with a strongly bullish posture and is establishing new trading levels well above its 30 day moving average. Crude Oil rallied to new multi-month highs and has a strongly bullish posture. Gold is heading in the opposite direction and continues to have a strongly bearish posture.
The 10 year U.S. Treasury Yield closed at 1.47%; this falling interest rate environment has pushed preferred stocks and high yield bonds to multi-month closing highs.
On Tuesday, growth-oriented areas like Technology, Communications and Discretionary outperformed the cyclical and defensive sectors. The charts of Industrials, Materials, and Financials have broken down significantly in the last three weeks; all have strongly bearish intermediate postures.
Our trade application example featured a bearish long put spread on Merck & Co (MRK) due to its bearish Near-Term divergence signal and its underperformance today, where it closed in the red and appears to be using the falling 30 day moving average as resistance.
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Stock Market Outlook Video – News, Analysis, & Insights for June 23
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.