Market Summary

This last week painted a mixed picture or so called “fractured market” in the financial markets. In a trending market the major indices tend to travel together in the same direction all going up or down together. When they become disjointed with some going up and some going down on the weekly price performance numbers it can be a sign of consolidation or an impending market reversal. For the week gold per the GLD did the best up 5.28% and gasoline per the UGA did the worst down 4.30%. Click on table to enlarge.

The sector graph below shows the same number of green and red sectors as last week however what is notable is the improved performance of the Industrial goods sector compared to last week and the worsening of the Financial sector from last week. Could it be that a report by the Commerce Department that US Durable Goods fell less than expected produced the uptick in Industrial goods? It is funny how once the bad news is out that the markets will rally. As for the big banks many of them came out with earnings this last week. And while they reported better than expected earnings the question remains why then do they need a federal bailout? I am keeping an eye on the financial sector as it has been the leader in this market both to the downside and upside. Click on graph to enlarge.

As I mentioned last week we have a rising wedge formation as a chart pattern on the S&P 500 which broke through the support line on Monday. And while the market did not continue going down after the break of the support line on Monday it was not able to get back up to the prior weeks high of 875.63 or this weeks high of 868.27. A break above 875 and the next level of resistance is the 930 area. However, a break below last weeks low of 826.83 and next target is in the area of 800 and then 750. The weekly chart candlestick pattern is that of a hanging man which is bearish. The daily chart of the S&P 500 below shows the break in the rising wedge and the cross of the MACD indicator (blue line) below its moving average signal line (red line) which is also bearish. My feeling is that we have more to go to the downside however which way the markets go we will just have to wait and see. Click on chart to enlarge.