Stock Market Produces Some ‘Unexpected Sparks’
Samuel Johnson (1709-1784), the English poet, once said, “Our brightest blazes of gladness are commonly kindled by unexpected sparks”. After an awful trading day last Friday, Monday’s and Tuesday’s stock market action definitely fall into the unexpected sparks category. Technical analysis is about discerning the composite mood of all market participants. When the market does something unexpected, it is something worth keeping an eye on. Some other minor and subtle shifts have occurred in market behavior in the last four trading sessions; (1) we closed above the 50-day moving average (red line in chart below) for the first time in over ten weeks, and (2) the 20-day (blue line below) is attempting to act as support in the past two trading sessions. These are minor occurrences, but they are steps in the right direction. Another close above the 50-day moving average (now at 1,088), would be a fairly significant short-term event for the stock market.
