Stock Market Outlook Clouded by Strong Cross Currents

The S&P 500 Index INDEXSP: .INX is trading higher on renewed enthusiasm around stimulus package approval in the United States.

Playing off Tuesday’s success in the broader stock indices, the NASDAQ Composite INDEXNASDAQ: .IXIC closed 0.47% higher while breaking its 5 day losing streak. That said, it closed well off its highs.

The only major U.S. stock market index that has a bullish intermediate posture is the Russell 2000 Index, which was up 0.25% on Tuesday and closed with a bullish intermediate confirmation signal.

None of the major stock market indices have a “3 Green Arrows” signal in the intermediate term. Over the longer-term, all major U.S. stock market indices have golden crosses on the 10/40 weekly moving average crossover system.

Interest rates continue to firm up with the 10 yr U.S. Treasury Yield closing at 0.80%. Meanwhile, government bond prices have slid. At the same time, the U.S. Dollar has a strongly bearish posture and is now trading below its falling 30-day moving average.

Commodities were supported with the drop in the dollar; gold rose 0.48% and oil rose nearly 2% and is now trading above a rising 30-day moving average.

Stock Market Video – News, Analysis & Insights for October 21st

Foreign bonds continue to outperform U.S. bonds.

Discretionary and Technology took leadership roles on the Sector Selector tool this past week.

The Energy sector rose 1.18% today, but remains lower by 17% over the past 3 months.

The Financials sector was up nicely today, but finished with a long upper shadow on its price candle, which has led to several short pullbacks in the past.

The Consumer Staples sector was the only one finishing in the red today, likely as a result of a rough earnings response from a tobacco giant.

Our trade application example featured selling a put on MongoDB (MDB) due to its bullish intermediate confirmation signal.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Twitter:  @BrandonVanZee and @Market_Scholars 

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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