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Wednesday, January 2, 2019

Daily update 1/2

Dip buyers came out to snatch up stocks after a down opening caused by poor economic data out of China.

SPX closed at a slight new bounce high, but not above Friday's intraday high.  Breadth was +68% which was very strong considering the amount the major indexes were up.  There was a drag from the big cap stocks because of the trade concerns.  If the Chinese economy continues to slow they will import less of our stuff affecting the big cap stocks more than the little guys.  New highs were still ultra low at 8.  New lows were stable at 62.  SPX has a green price bar.  During a strong downtrend that will sometimes bring out the sellers again just like a red bar in a strong uptrend can bring out buyers.

The market closed well, but something knocked the futures down after hours.  In last night's drop on the China news they hit the 20 SMA and bounced.  They are down over 30 points on AAPL news after the close, but are still above the open this morning as I write this.  We can see the futures have clear resistance as there has not been a bar to close above 2509 yet.  It remains to be seen if that resistance is insurmountable or not.

The green count crossed 50.  That is a positive unless it brings out the sellers again.  That has been known to happen.

Investors were not interested in selling into the big gap down this morning.  That let the dip buyers get SPX positive on the day.  However, there is resistance at the highs of this bounce.  I don't know if we will get through it or not.  A close below today's low (2467) could be sign the sellers are coming out of hiding again.  SPX probably cannot stall for too long before the sellers will take over since we are in a bear market.  I was expecting this bounce to continue higher, but the news flow may prevent that.  The global economy is clearly still slowing with no turn around in site by ECRI's long lead indexes.  They had this to say today.

Recent updates to the ECRI Industrial Price Index (IPI)* reveal that the weakness in global industrial growth being flagged by the latest international PMI data won’t let up anytime soon.

So we can expect continued weakness at least for a while longer.  I continue to believe it is the global economy causing this bear market so we need to keep an eye on that situation.  Poor global economic data could kill this bounce at some point.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.