Courtesy of John Nyaradi.
Although stocks managed to stop falling on Wednesday, their advances were weak, as the S&P 500 remained stuck below its 50-day moving average.
Stocks managed to recover from Tuesday’s free-fall, although the Nasdaq and the Russell 2000 continued to sink as “momentum stocks” failed 
to shake off their momentum, which turned bearish during Tuesday’s session. (Both the Nasdaq 100 and the Nasdaq Composite fell 0.46 percent.) The stock market advance was assumed to have been based on widespread hope that the folks on Capitol Hill would come to their senses. President Obama’s nomination of Janet Yellen as Fed Chair was also embraced by the market, as she was seen as not being in any particular hurry to end the Fed’s bond purchases. Republicans Talking Crazy about Debt Ceiling
The Dow Jones Industrial Average (NYSEARCA:DIA) regained 26 points to finish Wednesday’s trading session at 14,802 for a 0.18 percent advance. The S&P 500 (NYSEARCA:SPY) rose 0.06 percent to close at 1,656.
The Nasdaq 100 (NASDAQ:QQQ) declined 0.36 percent to finish at 3,142. The Russell 2000 (NYSEARCA:IWM) also fell 0.36 percent to close at 1,043.
In other major markets, oil (NYSEARCA:USO) sank 2.04 percent to close at $36.55.
On London’s ICE Futures Europe Exchange, December futures for Brent crude oil declined $1.22 (1.12 percent) to $108.19/bbl. (NYSEARCA:BNO).
December gold futures fell $18.00 (1.36 percent) to $1,306.60 per ounce (NYSEARCA:GLD). Sell Side Analysts Go Bearish on Gold
Transports were back in gear on Wednesday, with the Dow Jones Transportation Average (NYSEARCA:IYT) climbing 0.32 percent. Warning: There is a head-and-shoulders pattern on the IYT chart (seen as a signal for a decline). At Wednesday’s closing price of $115.54 per share, IYT remains below its 50-day moving average of $116.06, which it crossed with Tuesday’s stock market swoon.
In Japan, stocks managed to make a big advance, despite the fact that the exchange rate for the yen rose. The rally was attributed to reports that President Obama would announce at 3:00 p.m. that Janet Yellen would be his nominee as Fed Chair. The real reason for the rally was because the Bank of Japan minutes indicated that Abenomics was working. The yen strengthened slightly to 96.88 per dollar just before Wednesday’s closing bell in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (NYSEARCA:FXY). Nevertheless, the Nikkei 225 Stock Average jumped 1.03 percent to 14,037 (NYSEARCA:EWJ).
In China, stocks advanced in Shanghai, despite widespread warnings about the nation’s shadow banking system. Apparently, the warnings were taken more seriously in Hong Kong. The Shanghai Composite Index advanced 0.62 percent to close at 2,211 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index declined 0.63 percent to end the session at 23,033 (NYSEARCA:EWH).
As usual, events in the United States were reported as being the controlling influences in the European stock markets. According to the ethnocentric consensus, European stocks were in a holding pattern on Wednesday, as the world awaited resolution of the deadlock in Washington.
The Euro STOXX 50 Index finished Wednesday’s session with a 0.05 percent advance to 2,904 – remaining above its 50-day moving average of 2,845 (which rose more than the STOXX 50 itself on Wednesday, since it was 2,842 on Tuesday). Its Relative Strength Index is 54.80 (NYSEARCA:FEZ).
Technical indicators revealed that the S&P 500 remained below its 50-day moving average of 1,678 despite finishing Wednesday’s session with a 0.06 percent advance to 1,656. Its Relative Strength Index rose slightly from 39.19 to 39.63. The MACD continues to sink below the signal line and has now crossed below the zero line, suggesting the likelihood of a resumed decline.
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