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Tuesday, March 19, 2019

Daily update 3/19

It was a bit of an odd day.

SPX gapped up at the open, but went nowhere.  Mid morning there was a significant buy program that hit the market which sent SPX to new highs.  After that ended, the market was drifting lower when a headline about China trade troubles hit.  That sent SPX down nearly 30 points from the high.  A late day bounce into the close made things less bad.  Breadth was -58%.  The trade headline definitely took a little bid out of the market.

The futures are showing the first white candle since this bounce began.  That might bring on a consolidation/pullback.

The green count turned down a bit, but remains above 50.

The breadth chart shows the 10 DMA lines barely have a positive cross.  The McClellan oscillator briefly crossed above 0, but went negative again today.  Not a lot of strength here.  We could be looking at a short term top forming.

Tomorrow the FED is expected to announce plans to end QT by year end.  That could be one reason why there has been a lack of sellers lately.  I don't know if that will be a sell the news event or not.  The transports and the R2000 have not participated in this last bounce.  They are still below their 200 DMAs.  When SPX was up early in the day transports had already started selling off and were fairly red early on.  I know SPX broke out above the series of highs since last Oct., but the market is still not getting into gear.  However, it was that same way last summer, but SPX kept marching to a new high.  Will it be able to do that again?  I don't really know.  It would not shock me, but neither would making a lower high and retesting the Dec. low.

I heard talk of green shoots in Europe today, but that is not clear at all to me.  I think people are saying that based more on the markets rallying than on actual data.  Data in the U.S. is still softening.  I don't know how all this will work out.  ECRI has been out talking about their long lead indexes after they detect a change.  For the last few years they have been spot on saying the global economy was set to pick up or slow down.  I would think they will continue to do that.  To date they have not mentioned a turn up in the long lead indexes.  That means there is still downside risk in the global economic data over the next three to four months.


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