17 October 2016 – A short term support?

The indices traded down as we enter the beginning of the earnings season. The banking stocks such as JPM, C and BAC have reported good earnings and that augurs well for the other domestic banks. We have a busy week with nearly hundred S&P 500 companies reporting quarterly earnings.

Dollar index declined slight helping to put less pressure on the equity market.

Oil continues to hover around the %50 per barrel mark. Gold and Silver continues to trade sideways.

Bonds made slight gain but is still in a sharp downtrend.

Dow Transportation range traded throughout the day and closed with a small bullish spinning top doji candle below its 21 EMA. Momentum remains downward. Volumetric buying pressure is at 45.1%. The index is in a monthly Squeeze.

Dow Industrial range traded throughout most of the day and closed with a small bearish candle below its moving averages. Momentum remains downward. Short term volumetric buying pressure is at 48.7%. The index is in a daily and monthly Squeeze.

Russell 2000 was volatile throughout the day with will swings up and down and closed for the day with a bearish inverted hammer candle below its moving averages. It is in a steep down trend. Volumetric buying pressure is at 6.4%.

Nasdaq 100 was volatile in the first two hours of the day before trading downward. It closed with a small bearish candle below its 50 SMA. Momentum is downward. Volumetric buying pressure is at 73.5%. The index is in a monthly Squeeze.

S&P 500 was volatile in the first two hours of trading and traded downward for the rest of the day. It closed with a bearish candle below its moving averages in a downtrend. Momentum is downward. Volumetric buying pressure is at 31.2%. The index is in a daily and monthly Squeeze.

Metals and Commodities
WTI Crude oil futures continues to hover around the $50 per barrel mark in a sideways trading.

Gold futures is trading at $1259.2 per ounce and and is hovering around its 200 SMA. Momentum is downward.

Silver futures is trading at $17.610 per ounce just above its 200 SMA in sideways trading.

Agriculture (DBA) ETF closed at 20.28 with a small bullish candle above its 21 EMA. Momentum is reversing to a bullish bias.

Commodities (DBC) ETF traded upward and closed at 15.28 in sideways action above its moving averages.

Bonds
Bond futures (ZB) traded sideways at 164’18.

High Yield bond ETF (HYG) closed at 86.74 in sideway trading on its 21 EMA and above its 50 SMA. Momentum remains upward.

Bonds ETF (TLT) made gains and closed at 132.43 below its moving averages in a downtrend.

Currencies
The dollar index pulled back from its recent uptrend and is trading at 97.665 above its moving averages in a sharp uptrend.

EUR/USD traded upward and closed with a small bullish candle. It is trading at 1.10194. It is still in a sharp downtrend.

USD/JPY traded sideways and is trading at 103.855.

Relative Strength – Sectors
On a monthly lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLU, XLF, XLB, XLK and XLI respectively.

On a 3-month lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLK, XLU, XLF, XLB and XLI respectively.

Market Internals
Vix closed at 16.21. Vix futures is at 16.35 and has been Squeezing upward. Skew is at 124.08. Market sentiment is neutral. Market breadth continues to slope downward showing nett losers compared to gainers. Volumetric accumulation/distribution is sloping downward which means nett distribution.

The Week Ahead
Investors continue to adope a risk off attitude and there is little buying pressure. Market internals are telling us that there are continuous selling. The banking sector is helping to lift the gloomy mood in the market. JPM, BAC and C have reported good earnings and that augurs well for the regional banks.

The prognosis is that the market will continue to be under selling pressure but we are starting to see signs of support coming in.

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