As reported by WSJ radio this Friday morning: This week is the first time in history that the Dow Industrials have seen four consecutive 400+ point daily moves. Two up, two down.
As I did my market review last night, the impression I had is that the market is poised for a rally today, but I don’t say that with any conviction. This environment is treacherous and I plan to stay on the sidelines a little longer.
Finally, a note on the technical picture. There has been some commentary, as we should expect, regarding what appears to be an imminent “death cross” (50 day moving average crossing below 200 DMA) on the S&P 500. This has been met with the rebuttal that the death cross just over one year ago not only turned out not to be a bearish signal, but very nearly marked the exact bottom in the index for the move – therefore proving once and for all that technical analysis is utter nonsense.
What the critics do not point out, is that the “death cross” was not confirmed by the MACD, which made a higher low at the same time. The point is that no serious analyst makes portfolio moves based on a single technical indicator. It’s the confirmation and convergence of multiple indicators that give a high probability signal.