Surprise, surprise – the stock market is rallying despite the nasty morning start that earlier drove the index to weekly lows. The chart (below) makes a couple of interesting points.
The market moved back in positive territory for the day at 1788 and so also ABOVE last week’s close at 1785.50, before dropping back below it on the close. Below the chart is the 14-day relative strength index – RSI, which plots three key low points on Monday, Wednesday and Friday. Note the slight upwards bias to the gradient of the line. On each occasion the value of the RSI at the bottom is incrementally higher than the previous value – a heads-up for those looking to call a bottom.
Of course that same point might need to prove itself on a daily chart over the next week or so, but for now it’s a healthy sign heading into the end of the week. Some investors naturally a wondering why the current installment of the emerging market crisis should have any impact on the value of US stocks – they might yet be the real winners should the market maintain its late afternoon strength into the close.