Markets endured a wild rise this week with Friday seeing the Dow and S&P 500 essentially flat and the Nasdaq gaining .3%. The week however will go down in memory as the Nasdaq rose 2.6% and finished the week more than 500 points off intraweek lows. The S&P 500 ended the week up by .9% also recording another huge reversal of 120 handles. Those benchmarks did not come close to recapturing the massive losses of the prior week with the Nasdaq falling 6.8% and the S&P 500 by 5.8%. This type of volatility is not normally associated with bottoms as they will ordinarily form in a smoother fashion. The question now is was the Wednesday-Friday action a dead cat bounce or the beginning of another V shaped recovery. Technical damage has been done with the S&P 500 on the verge of a death cross, with the declining 50 day SMA undercutting the 200 day SMA. Volume on both the Nasdaq and S&P 500 lessened with each successive session between the 3 day winning streak to end the week. Figures I will be watching the coming week will be the round 2000 handle for the S&P 500 and the 200 day SMA on the Nasdaq which lies just less than 2% away. YTD the Nasdaq is in the green by 1.9% while the S&P 500 has declined 3.4%. The sector that garnered the most attention was the energy group as crude jumped 12%. Sentiment is terrible with AAII bulls numbering just 3% as compared with 43% in 2011, h/t @convertbond. The OIH surged almost 10% and 20% off intraweek lows helped along with merger activity between SLB and CAM. We have been down this road before with the group and it will be interesting to watch the groups performance this week. Perhaps value is beginning to be seen with earlier moves between HAL and BHI. With profitable hedges expiring soon could we expect to see more?
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