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Wednesday, March 6, 2019

Daily udpate 3/6

Downside follow through.

The internal action today suggests this was just profit taking without a strong urgency to sell.  Breadth was -73% so the profit taking was broad based.  New highs contracted again to 58.  New lows were up again to 31.  We appear to be in pullback mode.

The futures ended the day below the 50 SMA.  Theoretically this could be a bounce point, but I don't think I would plan on this being the bottom.  This was a very big rally and this does not look like the end of the profit taking.

The red count crossed above 50.  That theoretically puts the bears in control in the short term.

The bears have stepped up to the plate and took a swing.  It remains to be seen how far they might have hit the ball.  I hear more and more talk about the poor economic data.  I think traders have largely decided they pushed the market as far as the could on trade talk and the FED reversal.  The only things left are the poor economic data and earnings estimates that continue to fall.  Neither of those items are bullish.  We have to pay attention to the weekly chart.

The neckline is pretty sloppy, but there clearly is a possible head and shoulders top forming.  QQQ and IWM are slightly different, but fall into the same possibility.  Based on how I perceive the economic data this pattern could definitely play out.  The global data is still softening and ECRI is still saying their long lead indexes have not turned up yet.  Another three months of softening data seems very likely.  How will the market handle that?  There is a real possibility this has been a last chance to get out rally and nothing more.  Be aware of the risk.


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