The Stock Market Performance: A Comprehensive Analysis

Hey there, folks! It’s Brian Shannon from Alphatrends Net. The date is Friday, 13th October 2023, and I hope your trading week was good. This week saw a mixed bag for the markets, with S and P and Nasdaq making slight gains, while Russell 2000 suffered a 2.3% decline for the year. Semiconductors faced a challenging week. Want a deeper look into this? Let’s dive right in.

The Market Overview

The markets’ performance this week was diverse. While S&P and Nasdaq ended with slight gains, Russell 2000 continued its downward spiral, dwindling by 2.3% for the year. On a brighter note, bonds and oil saw a rally.

Semiconductors, often seen as a bellwether for the stock market, had a tough week, curtailing the earlier impressive 46% year-to-date gain. This contrasts with the bullish rallies that bonds and oil experienced.

Exploring the S & P 500 and Nasdaq Charts

First, let's dig into the S & P 500 chart.

Focusing on the S & P 500 chart, we see an ominous picture forming. The market is below the five-day moving average and has begun to flatten.

The principal levels I'm eyeing are the anchored volume weighted average price from the month's low and date anchor. Ideally, I'd like this range to hold and then formulate a higher low, possibly serving as a springboard for further strength into the year's end.

On to the Nasdaq chart, which also tells an interesting story.

We found sellers lining up against the system's trend line. With the 20-day moving average, the 50-day moving average, and the anchored volume weighted average price from that peak converging, there's ample reason for traders to speed-check.

Again, these elements aren't action points but merely indicators to watch. As with S & P 500, we hope for a partial pullback, a flatlining of the 20-day average and a rise in the 50-day average before an eventual rally.

More Than a Russell 2000 Dog-Situation

When it comes to Russell 2000, the situation looks a bit grim.

Russell 2000, not for the first time, urged us not to buy its pullback. It isn't a pullback; rather, it’s a downtrend, and we continue to be rooted at the bottom end of this range that is the status quo for the year.

There's been some concern over the so-called Death Cross, which happens when the 50-day moving average crosses down the 200-day moving average. But historically, these have not always signaled doom. The last one didn't color the one-month and three-month returns strongly bearish, and the one prior after COVID also didn't capitulate the market.

In my view, Death Crosses are noise in the intermediate term. The market is clearly off the highs for the year, which implies now isn't the time to get bearish. In fact, short-term downward momentum continues, and it's practically fruitless to seek buying opportunities in the attempt for more than a bounce.

A Snapshot of The Semiconductors

Semiconductors did rally as did the Nasdaq and met the trend line off the all-time high and the August high. In the near term, we have a bit of downward momentum; however, a bounce might be imminent.

But watch out for potential resistance near the 150 area. Building on that strength would require buyers to regain control and push higher.

Journey Through Financial Stocks and Energy Names

Financial stocks began the earnings season, and their performance was a letdown. They raised a paltry six pennies, indicating weak conviction. Given the proximity to the prior band of resistance, apprehension is understandable.

As for energy names, they're all over the place. Oil prices, in particular, have seen significant volatility. Interestingly, the average long from a pullback is now making money, while the average short is losing—signifying that the buyers are currently in control.

Wrapping It Up

In a nutshell, the past week's markets have seen mixed performances. Minor gains for some indices contrasted with significant drops for others, while bonds and oil defied the odds with healthy rallies. Going forward, the landscape might change as traders digest market information and adjust tactics.

The beauty of the stock market resides in its unpredictability and dynamism, providing astute traders with opportunities to thrive. So, stay tuned, and let’s see how next week unfolds.

“If you don't study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards. - Peter Lynch"

Until we meet again, have a great weekend, and happy trading!