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Thursday, August 2, 2018

Daily update 8/2

Bulls show some enthusiasm.  All it took was me suggesting the market might fall if they didn't get going.

SPX gapped down below the 20 SMA, but the buyers stepped in immediately.  It closed above the highs of the last three days.  Breadth was +55%.  New highs were up a little to 85.  New lows were also up a little to 58.

In the night the futures tested below all the lows since 7/17.  However, by the open they were well off the bottom.  They ended the day back above the 20 SMA.  This looks bullish for now.

Despite the rally we got a negative cross on these lines.  The bulls need to keep the enthusiasm up.

It occurred to me this morning that the last few employment report days have been good for the market.  I wonder if some of today's buying was to front run the report in the morning.  QQQ was very strong, but XLF was barely up.  AAPL pushing to a $1 trillion market cap was almost all they wanted to talk about on CNBC.  That may have helped spark buying across tech today.  It still does not seem like the market is really getting into gear yet.  We will have to see if this bounce turns into something or not.

On the economic front Asia is not doing very well.  Most major stock markets (except India) are below their 200 day MAs.  China has been loosening monetary policy for months.  Now they are talking about fiscal stimulus again.  I am sure the Trump administration is noticing this.  That could add resolve to the trade war idea.  This is kind of like 2008 in reverse.  At that time the U.S. was sinking while the rest of the world was doing good and Asia especially China was roaring.  Asia certainly has the capability of tanking the global economy if things get too wonky (fancy economic term) over there.  I heard an analyst from PIMCO today on CNBC saying what I have been saying.  He expects neither the U.S. or China to back down in the short term and things are likely to get worse before they get better.  I may not be right about that, but at least I won't be wrong alone.


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