Amidst concerns of a potential government shutdown in the US this weekend, the SP500 has displayed a hint of optimism. On Wednesday morning, there was an attempt to drive the price below its 200-day EMA, but this was not sustained. Investors promptly responded, ensuring the SP500 closed Wednesday near its 200-day EMA. This positive trend continued Thursday and faltered Friday, ending the week near where it opened and the August 2022 high.
The daily chart continues to show weakness in the SP500. The gap between the 20EMA and 50EMA is increasing with the short-term and long-term MACDs pointed down.
The weekly chart shows four down (black candle) weeks. It is implied by the shape of this week's candle and higher-than-average weekly volume that investors have begun to start buying again. This week also represents the end of the quarter. While performance tapered off coming into the quarter end, the SP500 is still solidly in positive territory for the year.
Breadth across the sectors remains weak. 5-day breadth shows some hints of possible change.
The upcoming week's market behavior will be influenced by the decisions made by the US Government over the weekend. The uncertainty surrounding the government's actions coincides with a weak market, which increases the risk of a market decline. If the government does proceed with a shutdown, it will likely be volatile next week. As for myself, I am deciding to stay out of the market.
I hope everyone has a great weekend!