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Tuesday, July 3, 2018

Daily update 7/3 Mauldin: Unfunded Promises

This is what happens when news hits during holiday trading.

The market gapped higher, but sold down a bit.  It was busy going nowhere until around 12:15 when selling in MU intensified over a report they would not be able to sell chips in China due to a court ruling.  Apparently the news came from UMC non MU.  As I write this MU says they have not received any notification about this.  SPX dropped around 18 points after 12 PM as the selling spread across the tech sector.  This seems like a news event that will likely be retraced.  Breadth was +62% reflecting that selling was very narrow.  New highs increased to 72.  New lows dropped way down to 26.

The futures had confirmed a break of the 20 SMA this morning.  However, the late day selling took them back below that line. 

The red count dropped under 50 despite the down day.  Still a ways to go to get a positive cross.

The day looks a little nasty on the chart, but I it may not be as bad as it looks.  The move down was clearly news based in a shortened session with many traders out of the office.  At this point we don't even know if the news is real.  From what I read it seems it is a patent dispute, not trade war related.  As I write this MU said they have not received any notification on this subject.  Thursday will be interesting to see if the bulls return. 

The next installment of Mauldin's train wreck series.  Unfunded Promises


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