Both bulls and bears took their shots today. At the end of the day SPX ended up right where it started. Breadth was -57%. New highs contracted to 62. New lows doubled to 9. SPX remains just below the all important 200 SMA.
The futures are down a few points after hours. They are still above the upper channel line, but they could come back in easily.
The market has been consolidating since yesterday's gap up. It is not uncommon to consolidate near an important MA. The question is whether this consolidation is going to lead to an upside break out or a reversal. I don't know.
For many months I have heard nothing but money managers and traders on CNBC saying they expect cooler heads will prevail and trade issues with China will be resolved before too long. I have mentioned a few times the issues are not simple and I don't think we should expect a resolution soon. I heard three different people today saying pretty much the same thing. None of them expected a quick resolution. I don't know what happens as we get closer to the March 1 deadline, but a trade deal seems the least likely outcome to me. Trump could threaten to raise the tariffs as planned. The market would not like that. He might put the raise on hold if negotiations are going well. The market would probably like that.
There is still uncertainty related to the global economy. Since the start of the year the market has ignored all of it. However, I can't help but remember how last year started out. Hot Jan. and cold Feb. I am starting to hear people talk about the market making new highs this year. The pessimism from Dec. has melted away. I see the global economy as the real threat to the market. Until things improve globally downside risk remains.
Bob
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