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Stocks Up Ahead of Fed Meeting

By Matthew Kerkhoff

 

Stocks have declined for three straight weeks but are starting out strong today. The weekly chart of the S&P 500 below shows that the longer-term upward trend remains intact. We’re approaching the lower trendline of the channel, but have not violated it.

 

It’s interesting how closely the lower trendline matches the path of the 50-week moving average (thin blue line). In fact the trendline almost appears to be a linear regression of the 50-week MA. Both the 50-week moving average and lower trendline should act as mild support on further declines.

 

 

The small-cap Russell 2000 index is holding up better (weekly chart below). This index has only experienced one down week in the last six, and sits within a few points of its record high.

 

Small-cap outperformance boils down to being better insulated from strengthening dollar concerns and muted overseas exposure. See prior remarks for a more comprehensive explanation. As a side ... Log in or subscribe to continue reading.


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