EC A Stock Market Bent Out Of Shape But Not Quite Broken

AT40 = 38.7% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 42.4% of stocks are trading above their respective 200DMAs
VIX = 20.0
Short-term Trading Call: neutral

Commentary
The bears did their best to spook the market, but they failed to break it down. The foundations felt wobbly for most of the week, but at the end of it all the major indices managed to record gains. The S&P 500 (SPY) ended the week up 2.0%. The NASDAQ and the PowerShares QQQ ETF (QQQ) each rebounded by 1.0%. The iShares Russell 2000 ETF (IWM) gained 1.2%. Even the materials sector, one area I fear HAS broken down, pushed the Materials Select Sector SPDR ETF (XLB) to a 1.6% gain for the week.

The S&P 500 (SPY) firmly defended 200DMA support through 5 straight days of churn.

Unlike the S&P 500, the Nasdaq made a new low for the month before closing up for the week.

The PowerShares QQQ ETF followed the NASDAQ’s pattern.

Although sellers pulled off a decent fade off the highs on Thursday, bulls and buyers should be encouraged by the ability of the S&P 500 (SPY) to stand its ground at its 200DMA. The Nasdaq and QQQ on the other hand did not defend any natural support. Indeed, Thursday’s rally was off a new low for the month. Tech stocks still have a lot to prove and still have the potential to drag the rest of the market down with them. For example, here is the positioning of the “usual suspects”:

Amazon (AMZN): more government-driven gyrations as Trump’s attacks gapped AMZN below its 50DMA. Stock rallied from a 6-week intraday low to finish the day with a 1.1% gain that closed the stock at its lower-Bollinger Band (BB). AMZN is broken until proven innocent.

Apple (AAPL): faded from 50DMA resistance and clung to a 0.8% gain on the day. The 200DMA is slowly converging from below.

Facebook (FB): Somehow managed to end the week flat! Stock is still stuck in a steep downtrend defined by its lower-BBs and trades well below its 50 and 200DMAs.

Google (GOOG): Likely in sympathy with Facebook’s data privacy issues, GOOG cracked 200DMA support. On Thursday, the stock gapped up above its 200DMA and finished with a 2.7% gain.

Netflix (NFLX): Buyers twice had to pick NFLX off intraday lows that cracked 50DMA support. While the stock lost 1.9% for the week, at least it held 50DMA support.

Nvidia (NVDA): Suspension of testing on driverless cars drove the stock below 50DMA. NVDA ended the week with a small loss.