(By Rich Bieglmeier) The indexes continued to ride the edge on Wednesday. The NASDAQ and S&P essentially closed on their respective 50-day averages, while the Dow violated the key benchmark at the close.
Picking up from yesterday's market brief, the indexes continue dancing on support trend lines, in addition their 50-days. Any more downside and we'll have a double violation. However, the indexes have made contact with the bottom edge of the trading channel once or twice since the start of June. On each occasion, stocks u-turned. Let's hope we see the same action on Thursday.
If not, sellers could be encouraged by a third bearish cross under as the MACD line could turn sour with another red day or two. The sell signal has been fairly reliable in the past 12 months. Four of the six happenings above the neutral line have seen stocks fall alarmingly fast.
Bulls didn't get any help from the Fed's minutes on Wednesday afternoon. The FOMC's notes were nothing more than a reiteration of the Fed's last meeting. The central bank is ready to act, only if certain conditions are met. Unfortunately, for Wall Street and Main Street alike, to meet the "if" conditions, the stock market and economy will have to leap off a cliff.
Maybe Thursday's Jobless Claims report can give the market a lift before the opening bell. Economists anticipate 375,000 initial claims, but with the holiday shortened week, iStock believes the number could be significantly lower than projections, only to be revised higher next week.
A little later in the day, at 9:45 am Eastern, Bloomberg will report its Consumer Comfort index. While it is a secondary report, it will give some insight into the mind frame of average Joes and Janes.
With lackluster employment news dominating the headlines, we believe confidence and comfort with continue to slide for some time.
We sincerely wish there was more to the story, but as Porky Pig would say, that's it folks. We just have to monitor the MACD, Trend lines and 50-day averages to see if they hold up or not. If they do, a new trend high is possible. If not, the 200 days could be paid a return visit.