Market Brief – Monday 10/22/18

The S&P 500 closed below its 200-day moving average for the second day in a row. Retail investors continue to buy, as they believe this recent weakness in the stock market is a buying opportunity. Large investors are selling to the retail investors, which is evident by the increase in trading volumes.

The other factor investors should be aware of is how the rallies over the past four days have faded into the close. The daily highs have been lower each successive day. This is a sign that buyers are running out of energy. Without a catalyst to drive stock prices higher, this is an indication stock prices are headed lower. With another round of CTA selling hiding below, buyers need to step up their game quickly.

The Nasdaq-100 held over its 200-DMA, while the DJIA has closed three consecutive days below its 100-DMA. The Russell 2000 small-cap index barely moved all day.

Treasury yields were down slightly on low volume. A low volume day after heavy selling is an indication that the sellers have reached an exhaustion point.

Physical gold tried to move over its 100-DMA and was rejected once again. Gold mining stocks were down on the day, but beneath the mining stocks and physical gold is a rising 50-DMA. A confirmation against the 50-DMA should be considered bullish.

Agricultural commodities successfully defended their 100-DMA and should start moving higher.