For the first time in a week and a half Wall Street finished with gains across the board. The tech heavy NASDAQ snapped an eight day losing streak (its first such bad run since January 2008) while the Down Jones Industrial Average posted triple digit gains. Crude oil, which is down 43% over the last 6 months briefly dipped below the historic low of $30/barrel before settling at $30.34 a barrel- this after a delay by about 50 minutes due to volatility on the New York Mercantile Exchange. According to CNBC:
“Oil prices lost more than 4 percent, extending a relentless selloff to trade below $30 a barrel for the first time since December 2003 on concerns about fragile Chinese demand and the absence of restraint in global production.”
“You can use it (200-day simple moving average) to take things apart and put them back together as it was designed, but it can also be used to pry things open, or punch a hole. And right now, it appears to be punching a hole in the prevailing bearish sentiment.”
The 200-day moving average shops whether the price trend is rising, stalling or falling. It’s generally considered bullish if the price is above the average, and bearish if it’s below.
“For the S&P 500 SPX, +0.75% this can be used as a barometer of the entire market. And it is widely used,” Harmon explained. “Even fundamental investors know that if the S&P 500 is over the 200-day SMA, they have a tailwind, but when the percentage of stocks above their 200-day moving average drops below 25%, which we’ve seen only four times in the past 12 years, it marks a major bottom for stocks.”
As of Tuesday morning the percentage of stocks in the S&P above their 200-day moving average was right at 25%.
Here are the final numbers from Tuesday, 1/12/16 on Wall Street:
Dow Jones Industrial Average: 16,516.91 (+118.34/ +0.72%)
NASDAQ: 4,685.92 (+47.93/ +1.03%)
S&P 500: 1,938.68 (+15.01 / +0.78%)