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Stocks in Strong Rebound After Surviving Test of 50-Day Averages Yesterday

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Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, August 16th at 2:12pm ET.


U.S. stock indexes are having an unusually strong day. Chart 1 shows the Dow Jones Industrial Average climbing more than 400 points (1.6%) in afternoon trading. The Dow tested its 50-day average yesterday and held. Chart 2 shows the S&P 500 trading 1% higher. Yesteday's pullback held above its June peak and 50-day average as well. Chart 3 shows the Nasdaq Composite Index also holding above its 50-day line. All market sectors are in the black and led by telecom, consumer staples, financials, and industrials. Walmart is gaining more than 9% to lead the market higher. Other Dow leaders are Boeing, Cisco, and Caterpillar. News that China is willing to meet with the U.S. to try to resolve the trade dispute between the two countries may be a supporting factor behind today's strong stock gains. Foreign stocks are also rebounding today which may also be helping. Bond yields are up slightly on some bond profit-taking. Commodity prices are also bouncing today after yesterday's steep selloff. U.S. stocks have been under pressure over the past week due primarily to heavy selling in foreign stocks, and emerging markets in particular. A one-day rebound doesn't remove the threat from weaker foreign markets. But it's an encouraging sign, especially if some easing of trade tensions provides a boost to global stocks. [VACATION TIME: I'll be taking some vacation time for the rest of this week and next. I should be back by the last week of August. Enjoy the rest of the summer].


Chart 1


Chart 2


Chart 3

John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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