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Woulda, Shoulda, Coulda

Well, if you read the earlier post, there was a bit of misinformation relative to a side comment about GE today that sent the market lower at the end of the day. After the market closed, it was determined that the misinformation was completely incorrect, but the damage was done. In the after hours market, the futures are up in an effort to recapture the ground lost to the mistaken story on the news.

Had the day ended up 300, where it was with 10 minutes to go before end of day – when the misinformation was circulated about GE – the Dow (and the S&P 500) would have closed above the key 20-day moving average. I've circled on the graph above the action today so you can see how the slight down close kept us from closing above that level (the dashed green line).

Additionally, the MACD indicator (described in an earlier post) has crossed into positive territory – a positive sign for the market.

Given this, we are still in the base building mode and – hopefully – ready to move higher into year-end.

The good news is that many of the economically sensitive companies had HUGE days recently. National Oilwell Varco is up 40% from its low, and its not alone. As the liquidity being pumped into the system works its way into the economy over coming months, these stocks will regain much of the ground they've lost. Particularly important is the China is pressing its growth agenda and will be sucking up oil, copper, and steel again when their stimulus gets into full gear.

Hang in there – the bottoming process is underway – it won't be a straight line back up but it will happen.

Mark