The weak economic report Tuesday morning likely caused more selling as it once again stoked fears of a new recession. But stocks ended the weak higher as the S&P 500 moved above a key level of resistance. This confused some traders but those who follow one method of analysis were not surprised.
.. The daily market internals Tuesday were negative enough to keep the pressure on the market throughout the day.that favored higher prices in September than most were expecting. Past experience with similar formations has allowed me to be confident in buying the market dips. Instead of continuing lower Wednesday, the S&P gapped higher Wednesday and added to the gains on Thursday alongside positive trade news.For the week, the Nasdaq 100 again led the averages, gaining 2.
In order to correctly analyze the advance/decline data, one must look at a number of different time frames. The monthly A/D analysis turned positive in the spring of 2016 and stayed positive during the 2018 corrections, which was bullish for the market’s major trend.The daily NYSE All A/D Line formed a bullish divergence on August 15, when the Dow dropped over 800 points.
The slightly weaker than expected jobs report on Friday, together with the recent comments from Fed Chairman Powell, make a 0.25% rate cut likely at the end of the month. I would not count on a 0.50% cut, as the economic data in my opinion does not currently justify such a cut. For example, last Thursday’s ISM Non-Manufacturing Index came in at 56.4 much better than the consensus estimate of 54.
The precious metals corrected at the end of the week, which was consistent with my comments last week that GLD “exceeded theSome, like Market Watch's, think this means a more significant correction, based on the sentiment of investment newsletters. However, I believe this could be another good buying opportunity. I see my open interest and volume analysis as a more accurate method of forecasting future price direction, one which has worked especially well since last October.
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