In last week’s news, Warren Buffett’s commented Monday that the economy has “fallen off a cliff,” but is optimistic that the banking sector will recover. Citigroup announced they we’re profiting on the year Tuesday and stocks soared with the DOW up 5.8%, S/P 6.4% and NASDAQ and Russell up over 7%. Citigroup itself ended up 34% on the day. Gold pulled back early in the week before climbing higher with a close of 928.00 on Friday (London Fix PM).
As the week progressed more good news rolled in, well investors liked the news anyways. Bernard Madoff was jailed on Thursday after pleading guilty in the largest investment fraud in Wall Street history, drawing in $65 billion over his 20 years scandal.
As the week progressed more good news rolled in, well investors liked the news anyways. Bernard Madoff was jailed on Thursday after pleading guilty in the largest investment fraud in Wall Street history, drawing in $65 billion over his 20 years scandal.
Last week’s rally looks small on the longer term chart. With a strong S/P previous support at 800, it seems likely that we would turn lower before breaching this point. That 800 level also happens to be where the 50-Day MA is currently sitting, for those of you who use Moving Averages. The indices broke their down trend line and closed above their 10 and 20-Day Moving averages and are sitting just below the 30-Day MA.
The VIX broke its current trend line to the downside last week. Whenever a trend is broken it is usually retested. That once support, will then act as resistance when retested.
For those of you that are bullish, a buy signal printed on the NYSE Bullish Percent Index on March 12. The BPI is applied to a group of stocks as compared to another and charted using Point and Figure Charts. Since we received this signal in an oversold state, it does give higher probability of success to bullish positions taken at these levels. While the chart may not make much sense, it is based off the simple rules of supply and demand.
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