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Wednesday, May 15, 2019

Daily update 5/15 Industrial Production

An interesting day.

The day started with a gap down that the dip buyers came out to buy up.  They lacked enthusiasm, but they held the market up.  Then a headline hit that the Trump administration will not be putting on any auto tariffs for now.  That brought out the buyers and sent SPX into positive territory.  Breadth was +62%.  New highs were up to 104.  New lows were stable at 62.

Tee futures ended the day above the 200 DMA, but have not confirmed a break yet.  They are currently right at the 20 SMA.  The last bar was green.  In a downtrend that can bring out the sellers again.  Tomorrow will be interesting to see if the bulls come out to play again or not.

The red count dropped back to 50 indicating the short term oversold condition has been worked off.  The intermediate indicator fell all the way to 47.  That probably means that a break of Monday's low could bring on significant selling.  Another 5% down would not be surprising in that case.

Today's industrial production reading was much worse than expected.  This is a pretty good measure of economic strength.  It is not looking good at the moment.  However, we will have to see if it gets revised higher next month.

We have had two light volume up days, but no clear sign a bottom is in yet.  The bulls will have to come out to play again tomorrow.  There is some risk today's headline driven move gets retraced in the next day or two.  The last two days could simply be a pause on the way down.  The bulls need to show a little more enthusiasm to keep the bounce going.  Maybe that will happen, maybe it won't.

The economic data is still showing some weakening around the globe including the U.S.   That could dampen enthusiasm for stocks.  With the FED doing QT a sharp rebound seems unlikely to me.  I guess we will see.


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