Part of the reason it held late day was favorable legislation for the credit card companies to take more of your money due to fees that are out of this world ridiculous. But that’s what gave the market a boost late day. It was starting to fade some, although not terribly, when it found a bid from the news on the ability to charge unreasonable fees to their clients. Heavily weighted stocks, such as Visa Inc. (V) and Mastercard Incorporated (MA), blasted up and took the market a bit higher off the lows allowing the markets to hang very well near the 50-day exponential moving averages. And that’s the key to the whole ball game here.
The markets normally reject upward moves off the lows either at the 20- or 50-day exponential moving averages. This market ran harder and cleared those 20’s, and ran head on into the 50’s, where it naturally got rejected the first time it came up there. It had been a very strong move higher off the lows, so from the perspective of failing at the 50’s from overbought alone on the short-term charts should have been expected. Add in the bears fighting naturally at those 50’s, and the combination made perfect sense. A sell off but the legislation to help the credit card companies kept the market up into the close.
A good day for the bulls, but really, they’ve accomplished little, if anything, bigger picture from a price only point of view as they’ve yet to be able to take control of those lost 50-day exponential moving averages and until they do, we have to be on guard as this move up being nothing more than a normal right side bounce off of oversold daily charts. A step in the right direction for sure, but they’ve still accomplished nothing of importance price wise.
So what is it the bulls have accomplished, if anything at all, you ask. Well, when studying the daily charts we see the move off the lows from the MACD’s are quite positive. Impulsive in nature. A strong move upward. That was a necessary component, if the bulls are to have any chance whatsoever from protecting this market before it breaks down below the line in the sand at S&P 500 1249. If the move up was weak on the oscillators you’d have to think that the final results are etched in stone. That the market would break down and get smoked in the near future. That could still happen.
The strong MACD’s offer no guarantee on those daily charts that this is the news the bulls had hoped for technically and thus all is well. Not at all. All is not well. There are tremendous fundamental headaches out there, and so the onus is on the bulls to carry this market forcefully back over the 50-day exponential moving averages. Until they make this a reality the market could just break down at some point, if the right combination of bad news hits from any one of a dozen, or so, it seems, global financial problems. The bulls have hope, but nothing more. Some good news on the daily charts gives them that hope, but for now, it remains only hope.
The financials were in vogue today as they got a nice bounce off the news from Greece, which put austerity back on the map. The vote was in and austerity won the day. I guess the Government had no choice in the matter. It’s a desperate time for that country, and putting the headaches austerity brings on its people was something they must have felt strongly about in terms of having absolutely no other choice. You know they didn’t want to do it, but they are in such bad shape, its backers said it’s austerity, or no money for you, and thus, your country fails.
It goes bankrupt, and that’s clearly not a good thing either, so they chose to do what they had to. It’s sad, but it is what it is. Necessity can cause people to do things they would never dream possible. Never thought I’d see austerity, but here it is, and for that reason. The financial stocks got a decent bid today. Some good moves technically as well as many of those stocks got over their 20-day exponential moving averages. Now can it hold? We’ll find out shortly.
So the battle is on. The bulls want very badly to take back the lost 50-day exponential moving averages, and the bears want nothing more than to make sure the bulls never get through. It really is all about the war at the 50-day on the top and the 200-day at the bottom. Noise in between. MACD’s are more favorable. Fundamentals are less favorable. Neither side should be feeling all that good here as both are fighting hard where they need to, but neither side is taking full control. A strong move over 1303 is key for the bulls, and on any selling, they’ll try to protect 1293/1295 support.
They don’t want to lose too many support levels in their efforts to break up. If the financial stocks can stay alive for a while, instead of doing their usual one-day wonder rallies and then falling apart, the bulls will have a better chance. More stocks are now healthier in their patterns, but again, far from out of the woods. The wrong news can turn this all around in a big way to the negative side. We watch and learn as we go. If the pullback from here is light and lateral then that would be more bullish, so we watch the days ahead for more insight.
Peace,
Jack
