Though the equity markets finished August with a bit of a whimper on Tuesday, the S&P 500 Index accomplished the rare feat of having closed higher for its seventh straight month. While it’s been smooth sailing for active investors, September is a new month and we need to be aware of potential volatility.
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The S&P 500 was down slightly on Tuesday, but it retained its strongly bullish intermediate posture and is just one day removed from an all-time high.
The Dow Jones Industrial Average and Nasdaq Composite also dropped by a small margin. The Dow Industrials continues to have a strongly bullish posture but and the Nasdaq has the strongest intermediate reading of the four major stock market indices of 95.74. The Dow Jones Industrial Average is the only major index without a “3 Green Arrows” signal.
The Russell 2000 was Tuesday’s winner (+0.34%), but its chart continues to chop sideways over the last 3 months, unlike the upward ascent of the other indices.
The S&P 500 and Russell 2000 ended the day with bullish intermediate confirmation signals, but they weren’t considered ideal set-ups due to the near-term lines.
Many Chinese stocks bounced back aggressively today, which allowed the Emerging Markets to easily outpace (+1.37%) the developed nations around the globe.
While both fell today, Technology and Financials improved their week-over-week rankings on the equal-weighted Sector Selector tool.
Interest rates continued to firm up today and the 10-year rate closed at 1.30%; it continues to trade above a rising 30 day moving average. Inversely, bonds broke down; U.S. Government long bonds (-0.68%) fell slightly more than foreign bonds (-0.45%) and both have bearish intermediate postures. High yield bonds have shown tremendous strength in the last two weeks, basically going from 3 month low to 3 month high (they now sit at a key resistance area).
Utilities are the only market cap-weighted sector to have a weakly bearish posture. Communications, Staples, and Real Estate have shown impressive bounces off their 30 day moving averages in recent weeks and have strongly bullish postures again.
Our trade application example featured selling a bear call spread on the small cap Russell 2000 ETF (IWM) due to its bearish Near-Term divergence signal.
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Stock Market Outlook Video (for September 1) – News and Analysis
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.