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Wednesday, May 29, 2019

Daily update 5/29

Break down below 2800 and test of 200 DMA.

SPX opened below 2800 and mid day tested below the 200 SMA.  However, there was no panic selling and a few dip buyers showed up.  SPX ended the day 17 points off the low.  Breadth was -65%.  New highs dropped down to 73.  New lows spiked up to 205.  That is a new high number for this pullback.

The futures have not been this low since back in March.  They show a break of the 200 SMA and then a rejection of that MA on the bounce attempt.  That probably opens the door to more downside.

The red count was up a bit more, but remains below the oversold level.  The intermediate indicator needs to get back above 50 before we can talk about this correction being over.

I am not hearing any fear or panic.  I think I even heard people talking on CNBC about the lack of panic selling.  That generally means there is more to go on the downside.  The bulls may mount a bounce here off the 200 DMA, but they will have to show they are serious to make a convincing bottom.  A bounce here to test 2800 from below would not be unusual.  I think the lack of panic indicates there could be sellers still lurking on strength though.  The 2750 and 2650 targets are waiting down below on further weakness. 


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