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Friday, June 15, 2018

Daily update 6/15 Recession Alert: World Headed for Cyclical Slowdown

Sell, sell, sell.  No wait, buy, buy, buy.

After some selling into the down open this morning the dip buyers showed up and rallied SPX back to the flat line.  The sellers showed up again a bit going into the close.  Breadth was -51%.  New highs contracted to 81.  New lows expanded to 73.  That is a lot of new lows at this point in the recovery rally.  Interest rates were down on the day so bond funds were not the culprit.  Still no close outside the range of the key reversal day.

The futures traded down to the lower channel line and bounced back.  They got above the 20 SMA for a while, but failed to stay there.  We do not have a confirmed downside break of the 20 yet.

Both the red and green counts increased today.  The green count is still above the red line, but is below 50.

The market sure seems to be taking the talk of increased tariffs remarkably well.  Is it that people don't believe it will happen?  Trump has been trying to renegotiate our trade deals for over a year.  Other countries are seriously balking at making any changes.  Trump started with the tariffs in order to get some movement.  He was on and off giving others a chance to do some negotiation.  So far no cigar.  I think he is getting close to the point of no more fooling around.  The tariffs are likely to be put on and stay on.  The talk from around the world is all about retaliation.  It seems to me there will be a trade war of some sorts.  How nasty it gets remains to be seen.  I just don't see Trump backing down anytime soon.  While the market is somewhat ignoring this at the moment it may change its mind some day.

Some investors are buying weakness while others are selling strength. Neither side has been very aggressive.  That could have been because of option expiration week.  They usually have a slight upside bias.  We also had strong SPY resistance at 280 because of options.  That may change next week.  Some day SPX will close outside the range of the key reversal day.  Until that happens expect more chop. 

More data on the global economic slowdown.  Recession Alert: World Headed for Cyclical Slowdown

Have a great weekend.


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