STOCKS RECOVER FROM EARLY DROP -- COMMODITIES REBOUND WITH STOCKS -- GOLD AND GOLD STOCKS BOUNCE OFF CHART SUPPORT
MARKET INDEXES ACHIEVE UPSIDE REVERSAL... Stocks turned in a reasonably impressive performance today. After trading lower this morning, the major stock indexes closed higher. Although volume wasn't that heavy, it did pick up a bit from yesterday. That turned what started out as a potentially ugly day into something more positive. Unfortunately, it doesn't change much from a trending standpoint. The three charts below show the major stock indexes still trading below their 200-day moving averages, although the PowerShares QQQ Trust (Chart 3) closed right at that resistance line. The Nasdaq market got some late-day help from chip stocks. Chart 4 shows the Semiconductor (SOX) Index bouncing off its 200-day average. Chip stocks were one of the day's weakest groups at the start of trading. When a market refuses to go down, that usually signals a rally attempt. To really improve the market's short-term picture, however, the major stock indexes need to reclaim their red lines and exceed their July highs in the process.
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Chart 1
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Chart 2
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Chart 3
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Chart 4
COMMODITIES BOUNCE WITH STOCKS... Commodities also rebounded late in the day. Chart 5 shows the DB Commodities Tracking Fund (DBC) closing back above its 50-day average. It remains, however, way below its 200-day average. Chart 6 shows a similar picture for the United States Oil Fund (USO). Gold also had a good day. Chart 7 shows the Gold Trust (GLD) bouncing off chart support near its May low. Chart 9 shows the Market Vectors Gold Miners (ETF) bouncing off similar support and its 200-day line. We've taken the view that gold and gold shares are correcting within a major uptrend. If that's the case, this is about where both should start finding new support.
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Chart 5
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Chart 6
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Chart 7
