“Stock Market: The market had plenty of reasons to go down last week, instead, it went up. That’s bullish!” Interview with Mr. Mark ArbeterCMT/President, Arbeter Investments LLC. Mr. Arbeter discusses the improvement in the market’s technicals which suggest that last week’s bounce, has “legs” and it carry the SP higher. He also discusses his views on bond yields, and natural gas. ———–
The stock market made a kick save last week, and again this week, with some of the major indices oscillating around their 200-day averages. The technical conditions have deteriorated, which we were not expecting, and the market needs to turn higher and, in a hurry, or we could see more downside that would take the steam out of our bullish call. The bears had been looking for lower prices and a test or break of the October lows, with the reasoning that we would see a noticeable weakening in the economy in 2023 and a concurrent disappointment in corporate results. Well, they might be correct about stock prices but for the wrong reasons as the market’s issue is spiking bond yields and a higher U.S. Dollar Index and an economy that continues to grow. Economists must be scratching their heads wondering when the tightening financial conditions will finally at least wobble the U.S. economy and calm the interest rate (both market and government rates) situation down. The S&P 500 fell to 3,928 intraday Thursday, just below its 200-day average at 3,940. The SPX also declined to a 38.2% retracement (3,927) of the rally since October. By midday, the SPX had recovered and was just above this average. The index has sliced through its 21-week exponential average (EMA). The index also broke its uptrend off the October lows, and we did see the 8-day EMA cross below the 21-day EMA for the first time since mid-December. The first important chart level is the 3,783 closing low from December 28. Breaking that prior low opens a lot of different scenarios as there are some key longer-term moving averages underneath the last low. The rising 200-week average comes in at 3,720 and the rising 50-month sits at 3,670. Both these averages provided support at the October 2022 lows and were last busted in July 2008. The 50-week was broken during the pandemic but only for three weeks. Conclusion: The stock market has taken more head and body blows than Tex Cobb (one of the greatest boxing chins of all time), and while wobbly, remains standing. The market had every excuse (surging yields) today to tank big time and once again, was quite resilient. What happens if/when yields rollover? Mark Arbeter, CMT. President, Arbeter Investments LLC
