SPX hit the upper channel line. These channel lines often provide support and resistance on any time frame. This is a place that could cause a pullback. It is rare to cross the channel like this and just keep going. The more common outcome is to pullback to the 50 SMA. Then decide whether to go up again or break down and head lower. Time to pay close attention. Breadth was +77%. New highs increased to 74. New lows were stable at 15.
The futures popped up a few points above the prior rally high. Is this a double top or the start of another leg up?
The green count recrossed 50. The bulls showed up when they needed to.
The question is what happens now. What happens on FED day is often retraced in the following days. Even though the market got just what it wanted with good earnings and a FED acting like a dove SPX closed only six points above the 1/25 high. If the market decides to retrace this news induced move the daily chart will look like a possible double top at upper channel line resistance. A subsequent break of the 50 DMA could bring out significant selling pressure. We will have to see whether people decide to sell or if they expect more good news to drive the market higher.
Cramer and others are always saying if we get a deal with China the market will soar 10%. I heard a guy saying that a lot of the sell off was on worries about the Chinese economy. I believe that to be correct. Then he went on to say that the Trump position is that China is taking unfair advantage of the U.S. I think that has been made pretty clear. The next comment was that a trade deal would be detrimental to the Chinese economy. I find that kind of hard argue with. There is no win/win proposition on the table. He expects a trade deal announcement to be a sell the news event. I guess that might depend on where the market is by the time there is a deal (if there is a deal). The last I heard the two sides were still far apart, but that can always change quickly.
Bob
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