The popular averages finished mixed again on Friday. Nevertheless, the S&P 500 again
reached an all-time closing high. February payrolls grew more than expected, but
the unemployment rate edged upward. The US trade deficit widened slightly in January.
Meanwhile, the price of crude oil rose while gold fell on Friday.
Above is my three-month chart of the S&P 500 exchange traded fund (SPY). The price
had been generally rising since a week after the 2012 presidential election. Some
market newsletter writers were expressing shock at the election result and warned
that the economy and stock market would continue to tank. That’s when I switched
to bullish. Since then I’ve only been neutral for a few brief periods, mainly during
congressional standoffs on the budget. Drops during this past December and early
January were nicely supported by the 50-day moving average. That was encouraging
and followed by record highs in the Dow Jones Industrial Average and S&P 500. However
the deep piercing of the 50-day MA on January 24 was cause for concern and turned
some of my outlook arrows yellow for a few days.
Heavy trading volume had been evident during the bottoming formation. The downward
pressure for over a week culminating in an up day on February 4 indicated a washout.
Bottom fishers appear to have entered the market on signs that the selling was overdone.
The SPY price pushing back above the 50-day MA on February 11 looks to have been
a positive technical signal. Successfully testing that as a support level on February
13 may have provided confirmation that those bargain hunters were doing the right
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