DOW AND S&P 500 BOUNCE IMPRESSIVELY OFF 100-DAY MOVING AVERAGES -- NASDAQ RISES FURTHER ABOVE 50-DAY LINE -- ALL SECTORS ARE IN THE GREEN -- WHILE THE VIX INDEX FALLS BACK BELOW 20 -- BLOOMBERG COMMODITY INDEX REGAINS ITS 50-DAY AVERAGE
S&P 500 BOUNCES OFF 100-DAY AVERAGE... Last Friday's midday message showed the S&P 500 testing chart support near 2640 and in a short-term oversold condition (black line). After rallying off that support level on Friday afternoon, stocks built on those gains today. The daily bars in Chart 1 also show the SPX bouncing off its 100-day moving average (green line). Chart 2 shows the Dow Industrials doing the same. Friday's message also showed the Nasdaq market trying to hold support at its 50-day moving average, which it did. Chart 3 shows the Nasdaq Composite Index building on those gains today. The ability of the Nasdaq to stay above that blue support line is an encouraging sign that the recent correction may have been contained. The CBOE Volatility (VIX) Index dropped -4% today to 18 putting it back below its historic average at 20, which is usually a good sign for stocks. All market sectors were in the green today with the biggest gains in utilities, financials, materials, technology, cyclicals, industrials, and energy. The rally in stocks pushed bond prices moderately lower. Crude oil and other commodity prices rebounded along with stocks.
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Chart 1
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Chart 2
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Chart 3
OIL AND GRAINS LEAD COMMODITIES HIGHER... Commodity prices rallied along with stocks today. That's not surprising since they've been tracking each other pretty closely of late. Chart 4 shows the Bloomberg Commodity Index regaining its 50-day moving average. Crude oil rose more than 2% on the day. Chart 5 shows the United States Oil Fund (USO) also ending on top of its 50-day line. Agricultural markets are also lending a lot of support to the commodity complex. Chart 6 shows the PowerShares Agricultural Fund (DBA) rising above its November peak to the highest level in seven months. That's being led higher by grain prices which are rallying on drought conditions in Brazil which threaten the crops of that big commodity exporter.
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Chart 4
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Chart 5
