Market Technicals Improving

The last few trading days have seen the market technicals improve. The S&P 500 Index has, at least temporarily, successfully bounced off of its 100 day moving average. This bounce has occurred at a level that has been important during this bull market run. The RSI and the Money Flow Index have both turned higher from depressed levels as well. The importance of the MFI was discussed in a post we wrote in mid May, A Tired Bull Market. Additionally, the On Balance Volume Indicator has bounced off support. It is the trend of the OBV Indicator that is important.

From The Blog of HORAN Capital Advisors

A couple of recent articles have noted the strong negative market sentiment, here and here, and sentiment indicators are contrarian measures, so may be the market is due for a recovery going into the end of the year. Certainly, there are some headwinds that need to be overcome, i.e., the debt ceiling debate in the U.S., the elections in Germany in September and the Fed's taper timing. Nonetheless, selling pressure may have eased in the near term.