It’s been a week, and although Congress is back to
their normal delayed ways by pushing the healthcare vote forward another
day, the markets wait for no one. We got more modest movement following
Tuesday’s sharp decline, with the end result being a bit of a mixed
bag.
More importantly today, we’ll see if the NASDAQ can somehow muster
enough strength to close at or above the all-important 3X3 DMA on its
weekly chart of 5,851. Provided below is a weekly chart of the NASDAQ
Composite showing you what we’re referring to. As you can sort of see,
the 3X3 DMA (blue line) sits at that 5,851 number.
Basically, should the index somehow fail to close at or above 5,851 today, the technical event would suggest a stronger possibility of a few more weeks of downside ahead, which as far as we’re concerned would actually be a welcomed event. These markets have clearly needed a breather for quite some time, so the event would likely help give equities better technical context for a more sustained bull market in the months ahead.
That may sound a little contrary, but the last thing long-term bulls want to see right now is a runaway freight train to the upside, as that would actually be the first sign of a developing long-term top. It’s only a matter of time before one develops, but based on the way things have been shaping up of late, that possibility still remains slim for the time being.
The bottom line is it’s still all systems go on a long-term basis for stocks. It’s more a matter of where they’ll settle before they finally do decide to resume their longer-term trend higher. Commodities, on the other hand, continue to paint somewhat of an interesting picture.
Oil continues to hang in there following that sharp decline a few weeks back, and although it continues to struggle, it still hasn’t managed to close below last week’s low, which you can see on the daily chart below. It’s breached it on an intra-day basis, but it hasn’t closed below it. However, if it can’t hold its early morning gains, it does appear it could be in for another leg down. We’ll just have to see how it plays out into early next week.
Regardless, we still don’t believe oil has all that much more downside ahead, despite all of the inventory rhetoric that continues to surface, because the reality is inventories can be manipulated by the powers that be at any point in time if they want to. They’ve done it before, and they’ll likely do it again.
Basically, should the index somehow fail to close at or above 5,851 today, the technical event would suggest a stronger possibility of a few more weeks of downside ahead, which as far as we’re concerned would actually be a welcomed event. These markets have clearly needed a breather for quite some time, so the event would likely help give equities better technical context for a more sustained bull market in the months ahead.
That may sound a little contrary, but the last thing long-term bulls want to see right now is a runaway freight train to the upside, as that would actually be the first sign of a developing long-term top. It’s only a matter of time before one develops, but based on the way things have been shaping up of late, that possibility still remains slim for the time being.
The bottom line is it’s still all systems go on a long-term basis for stocks. It’s more a matter of where they’ll settle before they finally do decide to resume their longer-term trend higher. Commodities, on the other hand, continue to paint somewhat of an interesting picture.
Oil continues to hang in there following that sharp decline a few weeks back, and although it continues to struggle, it still hasn’t managed to close below last week’s low, which you can see on the daily chart below. It’s breached it on an intra-day basis, but it hasn’t closed below it. However, if it can’t hold its early morning gains, it does appear it could be in for another leg down. We’ll just have to see how it plays out into early next week.
Regardless, we still don’t believe oil has all that much more downside ahead, despite all of the inventory rhetoric that continues to surface, because the reality is inventories can be manipulated by the powers that be at any point in time if they want to. They’ve done it before, and they’ll likely do it again.
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