Overbought conditions can be worked off either via time or price. Today was a great example of it being worked off via time; rather than any form of meaningful correction the indexes simply went sideways to mildly down letting some of these moving averages begin to catch up after this parabolic move to end the year. The S&P 500 fell 0.03% and the NASDAQ 0.25%. Economic news was sparse.
Here are some longer term charts for the S&P 500 and NASDAQ as we look towards the end of the year - it has been quite the year for stocks. The NASDAQ has been easier to patter because it has been in a beautiful channel for 95%+of the year. Yesterday was the first day all year it broke the upside of this channel and today it came back inside of it.
The S&P 500 as you can see has held an uptrend we created by connecting the highs of summer to early fall. Once it broke over that trendline in mid October it barely looked back. It tested support in early November and a week ago Wednesday intraday right after the Fed announcement ; anyone buying at that support level has been rewarded handsomely in just a week and a half.
Twitter (TWTR) declined sharply after Macquarie Capital downgraded the social-networking company to underperform from neutral. This was an extremely overbought stock traveling into the upper reaches of the atmosphere so was prone to any pin prick to hurt it.
We have not talked much about commodities this second half of the year because frankly they have either not been doing much or acting bad. But as we close the year out let's take a look. Of the "big 3", oil looks the most promising. Most of the year, with the exception of a spike around the Syria situation it has not done much. It was in a downturn most of the fall but seems to be potentially bottoming, then flagging, and now maybe breaking out, so we'll watch it a bit closer.
As for gold and silver - just bad years, but this has followed a near decade long rally. Gold is lost at sea and silver at least needs to break over mid $21s to try to break this downtrend.
CNNMoney has a helpful story on 8 disappearing tax breaks, worth being aware of. Have a good weekend and we'll see you back here next Monday.