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Monday, May 20, 2019

Daily update 5/20

More trade tensions.

Europe was down a sizable amount which sent the U.S. market down at the open. However, once again there was not a lot of interest in selling into the weakness.  After an early morning bounce the sellers went to work hitting the bids.  Breadth was -64%.  New highs dropped to 71.  New lows picked up to 116.  Technology was hit as the trade war hurt the semiconductor sector especially hard today. 

The futures ended the trading day below the 20 SMA, but have not confirmed a break yet.  At the 5 PM. bar close they were up 6 points from the 4 PM close.  I do not know what that is about.

The red count recrossed above 50 keeping the bears in control for the moment.   With the intermediate indicator below 50 there is some risk of more downside if SPX falls through the recent low.

The utilities were in the green as some money rotated into that safety play.  There is definitely some de-risking going on, but money must be staying in the market or we would have been down more today I think.  I do not know how many more downside gaps the market can stand and still hold up.  SPX is consolidating at the lows.  The question is whether it is making a bottom, or pausing before going lower.  SPX tried to get over the 50 DMA but appears to have failed.  That is a negative.  The market has been so strong this year I hesitate to say a trip to the 200 DMA (2776) seems like the most likely outcome.  That is probably where we are headed if the bulls don't pull a rabbit out of the hat pretty soon.


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