Friday, 29 June 2018

Markets mixed, Dow also sending mixed signals

Markets were mixed on Thursday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.8 percent.

Earlier in Asia, the Shanghai Composite fell 0.9 percent but the Hang Seng rose 0.5 percent while the Nikkei 225 was little changed.

The Shanghai Composite closed 20 percent below its peak on Tuesday, confirming a bear market, but US stocks have been more resilient, staying within correction territory.

Still, Schaeffer's senior quantitative analyst Rocky White noted that the Dow Jones Industrial Average broke below its 200-day moving average on Monday.

“If history is a guide, based on this signal, stocks could struggle going forward,” he said.

However, Mark Hulbert at MarketWatch has an opposing view.

Hulbert noted that while selling stocks after the Dow breaks below its 200-day moving average may have been a good strategy previously, this has not been true recently.

“You would have made more money over the last 25 years by treating the breaking of the 200-day moving average as a reason to increase stock exposure rather than reduce it,” he said.

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