After a very disappointing day on Tuesday (when the market dropped over 3% from its intraday highs), the stock market bounced-back quite nicely yesterday. The S&P 500 rallied 3.4% and finished on its highs of the day for the second time in three days this week. We do have to point out, however, that the internals were pretty mixed. The breadth was quite good…at 20 to 1 positive on the S&P 500, but volume was almost 20% lower than it was on Tuesday when the market saw its big downside reversal. Also, as one rather smart fellow pointed out to us, the most active names were chock full of the laggards…which had been beaten up so badly for so long that they didn’t have anywhere to go but up. (USO, UCO, CCL, F, MFA, GE, CHK, BAC, DAL.)
That said, it was still great to see that the S&P was able to break more meaningfully above its 200 week MA. As we highlighted yesterday, that was the most important resistance level we have been watching, so if it can hold above that line as we move through the month of April, it’s going to be bullish on the technical side of things. This will be especially true given that the SPX has made its first minor “higher-low/higher-high” sequence since the bear market began in February.
In fact, the same thing can be said about several other global stock markets…and about some of the key groups in the domestic stock market as well. For instance, South Korea’s KOSPI index, the Hang Seng index in Hong Kong and Germany’s DAX are have all made “higher-low/higher-highs.” Heck, even Italy’s FTSE MIB index is very close to making a higher-high after making a higher-low recently!
As for the domestic groups we just referred to, ...