A short-term correction was expected from the overbought levels that built up since the October lows. The potential world health and economic impact from the China virus outbreak finally rattled the US and world markets. What started as a minor correction, has become a major short-term correction with concerns over the economic impact of the virus outbreak. China’s economy will take a hit as travel and economic activity is restricted.
An intermediate-term rally started in early October 2019 has continued into the new year. The markets have rallied strongly into January. At this stage, a short-term correction can be expected from the overbought levels that have built up since the October lows. The markets continue to rally and shrug off bad news, and market action has yet to signal a short-term correction.
The intermediate-term rally started in early October 2019 has continued into the new year. The markets bounced back from the modest selloff triggered by the US attack on Iran and continued to rally into the first full week of trading in 2020. At this stage, a short-term correction can be expected from the overbought levels that have built up since the October lows.
During the two weeks around Christmas and New Year’s Day, the market volume is low as traders and market makers are on holiday. The markets can be easily buffeted up or down in the continues volume environment by unexpected news. Over the last week, many markets continued to make new all-time or recovery highs with a strong up day on Thursday. However, Friday’s news about the US attack triggered a modest sell-off. Next week will be the first full week of trading for 2020, and a short-term correction can be expected from the overbought levels that have built up since the October lows.
During the two weeks around Christmas and New Year’s Day, the market volume is low as traders and market makers are on holiday. The markets can be easily buffeted up or down in the low volume environment. The last week in December is also the end-of-quarter and end-of-year when major institutions are selling and buying to ‘window dress’ their portfolios for end-of-year reports.
Markets worldwide were up again last week. Market internals have continued strong and confirm the current rally from the October lows. NYSE (New York Stock Exchange) advance/decline line made a new high showing broad market participation. Net points gained and net volume made new highs indicating market intensity and activity confirming the rally. Also confirming the rally was the S&P 500 Small-Cap Technology index made a new all-time
Markets worldwide were up last week. World (non-US) markets were stronger than most US market sections. Market internals confirmed the current rally from the October lows. NYSE (New York Stock Exchange) advance/decline line made a new high showing broad market participation. Net points gained and net volume made new highs indicating market intensity and activity confirming the rally. Also confirming the rally was the S&P 500 Small-Cap Technology index made a new all-time.
After positive market action the week before, we saw how easily news impacts the markets. Negative trade news and the markets went into a three-day slide starting on Friday, November 29. After a bounce in US treasury rates, positive trade news, and an unexpected good US jobs report, the markets did a ‘V’ snack back rally. Most markets ended the week just about where they were the week before.
Long and intermediate-term indicators are positive. The markets over the last few weeks had entered a short-term correction. Most of the short-term indicators that had weakened In November are turning positive. Last week the advances-decline line for large-cap and mid-cap turned up and made new all-time highs. Small-cap advance-decline line turned up and made a new recovery high, and is close to making a new all-time high. The markets are dynamic and continue to show strong internal strength.
While the long and intermediate-term indicators are positive, the markets over the last few weeks have entered a short-term correction. While some short-term indicators have weakened, many remain positive. On the negative, the number of stocks above their 10-day moving average and cumulative net volume has declined. On the positive, NYSE stocks advances vs. declines are positive, and stock points gained vs. lost and up volume vs. down volume are positive.