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BEIJING , March 9, 2020 — March 6, 2020 shows a trader working at the New York Stock Exchange ... More reflects concerns for a possible all-out oil price war and economic slowdown. (Photo by Michael Nagle/Xinhua via Getty Images)
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It was another rough week for the stock market as the higher-than-expected PCE and the sharp decline in Consumer Sentiment helped increase the already high bearish sentiment. The heavy selling at the March 13th lows and the multiple declines below the weekly starc- bands favored an oversold rally to reduce very high bearish sentiment.
Looking at past market trading I was looking for either a strong two-week rally that might set the stage for a retest of the lows like in February 2016. The other scenario I discussed just after the lows was for a V-shaped rally, like early 2019, driven by short covering. In either case, I was looking for a strong weekly close soon after the lows to support either potential path for the stock market.
The Spyder Trust (SPY) was up only 0.5% for the week ending March 21st as it closed at $563.96 well below the week’s high at $570.95. The weekly close in the Invesco QQQ Trust (QQQ) below its yearly pivot at $481.91 was also a sign of weakness and put additional focus on last week’s close.
Stocks gapped higher on Monday and while the averages held their gains into the close on Monday there was not much buying on Tuesday as the S&P 500 and SPY formed dojis. The sharply lower closes on Wednesday triggered a doji sell signal in the S&P 500 and the A/D numbers were negative.
S&P Stock Index Futures
Tom Aspray -
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