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Market Outlook

The popular averages were up in the morning but closed to the downside on Monday. Significant macroeconomic reports were nonexistent. The FOMC will conduct meetings on Tuesday and Wednesday and provide a monetary policy report during the latter afternoon. Meanwhile, the price of crude oil fell while gold rose on Monday.

   Above is my 3-month chart of the S&P 500 exchange traded fund (SPY). As were the cases in October and December, the SPY price in early January fell under its 50-day moving average and then rebounded sharply back above. However, the fall back through it in mid-January briefly briefly caused concern. The price that week approached the levels of the mid-December and early January lows. The sharp bounce above that level on January 16 with supportive trading volume was a positive signal.

   After weakness in late January, the launch on February 2 from the 200-day-moving average to then close above the 50-day-moving average was most heartening. After a slight dip on February 4, the price shot nicely above the 50-day MA on February 5 to further inspire confidence. Despite drops on February 6 & 9, the SPY price held at that MA and then bounced nicely above on February 10, leading to a record closing high on March 2. After a correction earlier this month, the SPY price getting nicely back above its 50-day moving average began to appear encouraging. But the fall back under on March 24 caused some concern. The white line in the chart has provided support since early February. It stopped the decline on March 26. Springing above the 50-day MA on March 30 was welcome, but the fall back under on March 31 spoiled the mood.

   April began disappointingly on its first day, but the level of the white line proved supportive. The push above on April 2 was helpful. The price on April 6 closed not only above the white line but also above its 50-day moving average. That caused my weekly outlook arrow to rejoin the others painted an optimistic green. Getting back above that MA on April 8 and remaining above during the rest of that week was encouraging. I liked seeing the 50-day MA provide support on April 14, followed by a continuation upward on April 15 in shooting distance of an all-time high. The sharp fall back under that moving average on April 17 may have seemed worrisome, but since it appeared to be mainly due to reaction from a stock market regulatory decision in China, I did not alter my outlook arrows. The nice moves last week above the 50-day MA toward a record high on Friday made that appear to be a sound decision.

DISCLAIMER: Our commentaries are provided as general information and not investment recommendations. You are responsible for your own investment decisions. Our opinions are based on historical research and data believed to be reliable. There is no guarantee that results will be profitable. We are not responsible for errors or omissions. We may hold positions in vehicles that are mentioned.

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© Curt Renz

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