Today’s Action Confirms Buy Signal for Stocks

Today’s Action Confirms Buy Signal for Stocks

$DIA $SPY $QQQ $RUTX $VXX

Treasury Secretary Steven Mnuchin went on national TV Wednesday morning to assure markets that the federal government’s stimulus package is being rolled out smoothly amid the economic distress caused by measures to slow the spread of the coronavirus.

The US stock market rallied Wednesday, confirming the technical buy signals seen on 24 March and reported here. Thus, ending the shortest Bear market in history.

The S&P 500 gained 3.4%; the Russell 2000 (+4.6%) outperformed

The gap between the volatility indexes for stocks and Treasuries has risen to a mark that augurs gains in US stocks.

While the Cboe Volatility Index (VIX) and the ICE BofA MOVE Index have surged as the hit to growth from the coronavirus pandemic weighs on sentiment, only the Treasuries gauge has significantly dropped since.

The VIX stands around its 99th percentile and the MOVE index has collapsed to around its 16th percentile as the Fed intervened.

Note: This rare condition of intense stock market fear, combined with a calm bond market a powerful combination for ensuing stock market returns,

The MOVE closed Tuesday at 72.2, compared with its average 92.8 since the beginning of Y 1990.

The VIX was at 45.19 Wednesday in New York, and would have to fall below 24 to get out of the Top quintile from the past 30 years.

These 2 gauges are within the marks that give Bullish signs for equities, this signal will remain positive for stocks in the foreseeable future.

When the above happened the average annualized S&P 500 price performance has been at 21% compared to only a little more than +7% the rest of the time.

All 11 S&P 500 sectors finished in the Green with 7 groups finishing ahead of the broader market. Real estate (+7.4%) and energy (+6.7%) outperformed throughout the day while utilities (+5.4%) and materials (+5.0%) rose in late trade

Wednesday, the major US stock market indexes finished at: DJIA +779.71 at 23433.57, NAS Comp +203.64 at 8090.90, S&P 500  +90.57 at 2749.98, just off of the daily highs and breaking the overhead resistance.

Volume: Trade on the NYSE came in at: 1.21-B/shares exchanged

  • NAS Comp -9.8% YTD
  • S&P 500 -14.8% YTD
  • DJIA -17.9% YTD
  • Russell 2000 -28.6% YTD

HeffX-LTX’s overall technical outlook for the major US stock market indexes is Neutral with a strong Bullish bias.

Looking Ahead:

  • Initial Claims and Continuing Claims
  • PPI for March and Core PPI
  • Preliminary University of Michigan Consumer Sentiment for April
  • Wholesale Inventories for February
  • EIA Nat Gas Inventories

Have a healthy day, stay home, Keep the Faith!

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.