Despite the Nikkei's 6% drop overnight US stocks were able to find buyers pushing Major Market Averages higher by more than 1.2%. The Dow snapped its first 3 day losing streak of the year. S&P 500 tried to close above yesterday's high, but stopped short. Overall, the day displayed each of the major market averages finding much needed support at their respective 50 day moving averages. A key level of support we needed to see hold. After today's trading session we'll need to see some follow through for us to have a chance at regaining May's highs. A solid session for the bulls today with volume coming in higher shows this market still may have some highs left in it.
Economic data came in slightly better than expected. Jobless claims dropped more than expected. Advanced retails sales were slightly better, but weren't that exciting. Check out the following chart on jobs and ask yourself is this really sustainable?
Is the housing recovery for real given where lumber prices have headed? What about furniture sales?
Sentiment saw bears drop and bulls gain as the two nearly were even on the AAII survey. Bears dropped to 34.59 while the bulls jumped back over the 30% market landing on 32.97%. NAAIM saw position increase slightly to the bullish side, but still far from its highs seen earlier this year. Apparently the crowd and investment managers are not buying into the "but the [expletive] dip" or what we like to say "BTFD." We employ a different strategy that actually quantifies where we get in and out it is still fun to poke fun at the dipsters.
Time and time again trend following strategies of buying new highs or moving average crossovers outperform buying new lows. However, taking a look at the next chart it appears using volatility as a guide we may have seen at least a short-term bottom here using the SPY as our guide.
Have we bottomed?
We can't predict the future, but we can certainly play the odds. Happy Father's Day!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.