Saturday, May 21, 2016

Bulls Poised

The Market Trend Model (data sheet) moved to a neutral bias at the end of the week as stocks appear to have "sold out" after a nearly four week downtrend.

The Nasdaq (weekly chart) and the S&P 500 (weekly chart) both saw their weekly volume expand after these indexes undercut their recent lows of two weeks ago. Similarly, the Russell 2000 (weekly chart) saw its weekly volume expand as it undercut its recent low. Meanwhile, the Nasdaq-100 (weekly chart) saw its weekly volume expand as it came within a a few cents of its recent low.

It appears (at least for now) the recent quarter of disappointing earnings has been priced into the stock market, leaving room for stocks to melt up in the ongoing central bank "easy money" economic environment.  If nothing else, last week's price action/price lows draw a clear line in the sand for risk on/risk off.