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Friday, July 20, 2018

Daily update 7/20

A soft day.

SPX held 2800 again, but just barely.  Breadth was -52%.  New highs were up a bit to 84.  New lows were down a tad to 31.  It was a choppy session with bulls buying weakness and bears selling strength.  They got the SPY close below the option related resistance of 280. 

The futures had two odd spike downs overnight, but rallied back from each one.  They held the 20 SMA so far.  Will they bounce or break next week?

The green count fell back below 50 again.  It would be easy to get a negative cross now.

There has been no follow through of the breakout over 2800.  I have not noticed much in the way of selling pressure.  It looks more like a lack of buying interest.  That usually needs a pullback to get buyers interested again.  Unfortunately this may not be the best place to start a pullback from.  I can understand the hesitation from buyers with all the trade rhetoric going on.  I still heard people on TV today saying they think people will come to an agreement and this will all be over.  I am usually pretty good at reading people and I just don't see that happening.  Trump's version of walking away from the negotiating table in a trade deal is to use tariffs.  You won't deal with me I will just load up the tariffs.  Xi has been elected president for life.  He has no electorate to worry about.  He is sure he can just wait it out until the next U.S. election.  Both are sure they can win a trade war.  What am I missing?  I don't believe either is going to blink in the near term.  The market displays intelligence a lot of the time.  However, sometimes it does not see the future very clearly and gets blindsided.  This may be one of those times.  Stay nimble. Next week should see either a failed break out or an upside thrust to confirm it.

Have a great weekend.


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