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Thursday, March 21, 2019

Daily update 3/21

I guess overnight many investors liked the idea the FED was more dovish than expected.

The buyers came in on the gap down immediately and just kept buying all day.  You would have thought we were just coming off an oversold low.  Breadth was +68%.  New highs expanded to 170.  New lows dropped to 20.  The new red line marks the Jan. high.  The prior resistance box I changed from red to green to indicate potential support. 

The futures bounced off the 20 SMA to make a new rally high.

The green count recrossed 50.  The intermediate term indicator is showing some negative divergence so the rally is thinning out.

I thought all the good news was out before, but I was wrong.  The FED pivoted even more than people expected.  All the good FED news is definitely out now.  That leaves the China trade deal.  The last I heard on that actually seemed like a bad thing for the market.  Trump was saying the tariffs could be on for a long time.  I have been under the impression the market expects that as soon as a deal is reached the tariffs will be dropped.  That does not sound likely to me now, but I could be wrong.  I think there still are a lot of significant issues remaining as well.  Another question I have is will the market realize the FED ultra pivot stems from the very poor economic data.  In Dec. there was supposed to be more rate hikes and no end to QT in 2019.  Now there are no more hikes and QT will even end in Sept.  That did not happen because they are being patient.  That happened because they are getting worried.  The 2-10 yield curve has not inverted yet, but significant parts of the yield curve have.  Yesterday's announcement actually made the inversion worse.  Will the market notice?  Beats me.  This seems too late to be piling in long, but bears have nothing to work with at the moment.


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