By any measure, market activity looked pretty ugly this morning, as the major market ETFs opened sharply to the downside in what appeared to be the Bernanke hangover.
In addition, worries about domestic and global economies were supporting the plunge. However, the S&P 500’s 200-day moving average again proved to be a springboard, as buyers started to come in and a slow but steady turnaround materialized.
Helping the rebound were news reports that Greece & Co. had agreed on an austerity plan, which helped trim the early losses substantially. Oil got clobbered after the surprise announcement by the International Energy Agency to put 60 million barrels of oil on the market to make up for the losses from the Libyan civil war.
Since the market rebounded strongly, trend wise, no damage was done. Our Domestic TTI (Trend Tracking Index) remains +2.52% above its trend line, while the International TTI continues its path in bear market territory. Its current position is -1.50%.
Not breaking through the S&P’s 200-day moving average was an important test. Had this level not held, more selling would have been the result, as this point is the proverbial line in the sand for those following technical analysis.
We bounced off this level for now, but any more weak economic news will result in another test of this support point. This is not the time to become complacent; keep your eyes feasted on your exit points.
Chart courtesy of MarketWatch.com