Oil prices continued to pull down the markets causing extreme volatility in stock markets with Dow Jones Industrial Average swing more than 600 points during the first full trading week of the year. Stock prices plunged the first two days of the week follows by two days of strong rebounds and settled down a bit on Friday. For the week, S&P 500 index closed at 2044, down 0.65%. Dow Jones Industrial Average lost 0.54%, and Nasdaq composite index decreased 0.48%.
S&P 500 index touched the 28 week moving average during the week, bounced back and closed above the support line. The price movement formed a "Hammer" candle pattern in the weekly chart that we have discussed before. This "Hammer" pattern (a candle with long tail and short body) can be seen several times in the past during this rally, for example, in October 2014, August, 2014, February 2014, October 2013, .etc.. And each time S&P 500 index moved higher for another few weeks after the "Hammer" pattern occurs. Of course, past experience does not guaranty the future outcome, but it will be interesting to see whether the index behave the same way as in the past.
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| Weekly chart of S&P 500 index |
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