LATE STOCK BUYING SHOWS POSITIVE REACTION TO TARIFF SPEECH -- S&P 500 CLOSES AT 50-DAY AVERAGE -- FIVE-MINUTE PRICE BARS SHOW STRONG BUYING IN FINAL MINUTES -- THE VIX NEARS TWO-WEEK LOW -- THE NASDAQ MARKET IS HEADED FOR ANOTHER TEST OF 2018 HIGHS
S&P 500 CLOSES JUST SHY OF ITS 50-DAY AVERAGE... Late buying today pushed stocks higher and on rising volume. The daily bars in Chart 1 show the S&P 500 rising 12 points today (0.46%) to end at 2738 which is one point shy of its 50-day moving average. A move above that resistance line appears imminent. President Trump's speech at 3:30 this afternoon exempted Canada and Mexico from the tariffs on aluminum and steel and hinted at more flexibility in dealing with other friendly nations. The softening of the tariff threat was well received by the market. That positive reaction in the last hour of trading can be seen on intra-day charts.
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Chart 1
UPSIDE VOLUME JUMPS IN FINAL HOUR ... The 5-minute price bars in Chart 2 show the Dow Industrials jumping in the final minutes of trading this afternoon. Even more striking is the jump in volume on that late buying. Chart 3 shows a similar late burst of buying in the S&P 500 which closed right near its high for the day. The VIX also dropped. Chart 4 shows the CBOE Volatility (VIX) Index falling -6% today to 16 which is near the lowest level in almost two weeks. And most of the drop came in the day's final minutes. All of which Increases odds for higher prices. So is the fact that the Nasdaq market is nearing a new high.
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Chart 2
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Chart 3
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Chart 4
NASDAQ COMPOSITE INDEX NEARS NEW RECORD ... Another factor supporting more stock gains is the strong action in the Nasdaq market. The daily bars in Chart 5 show the Nasdaq Composite Index trading even further above its 50-day average and nearing a test of 2018 highs. An upside breakout there would give a big boost to the rest of the market. The influential Semiconductor (SOX) Index has already reached a new record (top box). That increases the odds for the Nasdaq to follow suit. The market will be watching tomorrow morning's unemployment report for any signs of rising wage pressures which could effect early trading. Judging from today's price and volume action, however, the market is entering that report in a more positive mood.
