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January 9th 2022  |

Market Review |

U.S. stocks finished the week with losses. The Dow Jones Industrial Average lost 0.3% over the week to 36,231.66. The S&P 500 booked a weekly loss of 1.8% to close at 4,677.03. The Nasdaq dropped 4.5% for the week to end at 14,935.90. Among the key S&P sectors, energy was the best weekly performer, while the real estate sector dragged the most. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 18.8.

Short-Term Technical Condition

On Friday the S&P 500 closed shy below the bearish threshold from the Trend Trader Index. As a result, the purely short-term-oriented price trend (time-series momentum) of the S&P 500 turned slightly negative. Additionally, we can see that the underlying momentum of this price driven trend also started to weaken and finally turned negative on Friday, since the Modified MACD flashed a bearish crossover signal. Nevertheless, the short-term-oriented price up-trend of the market has not completely broken yet, since both envelope lines of the Trend Trader Index are still increasing and have not formed a bearish rounding top so far. Also, the Advance-/Decline 20 Day Momentum Indicator is still trading in the bullish area and even succeeded to increase on Friday, hence, showing a bullish divergence to the S&P 500. As a result, the recent trend-break can be categorized as non-sustainable so far (at least from a purely price point of view). In times of increased volatility, it is not unusual that our short-term-oriented trend indicators give contradicting signals. In such a situation, short- to mid-term market breadth (known as the trend quality) will give us further guidance if the recent weakness has the potential to transform into a more significant pullback or if it was just the realization of increased volatility.

Our short-term-oriented trend quality indicators show an… READ MORE

 


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