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Monday, June 3, 2019

Daily update 6/3

More down on more overnight news.

The market was dragged down on speculation of regulation in the tech sector which hit a number of different stocks like AMZN.  Since those stocks have such a big capitalization they dragged down SPX.  However, breadth was actually +63%.  Some of that money was going into other stocks all day.  New highs came in at a respectable 100.  New lows were 109.

The futures are up 11 points from the 4 PM close as I write this.  The market looks to me like it has wanted to bounce for two days, but keeps getting hit with negative headlines overnight. 

The red count dropped a bit despite the down day.  It did hit oversold so we might still see a bounce.

I do not particularly like the lack of fear or panic selling for a durable bottom.  The daily chart shows a confirmed head and shoulders top.  So far the pullback has had two legs down.  In a bull market a two step pullback is the norm.  A bounce from this oversold condition would be normal.  However, without any sign of a selling climax it might be of the dead cat variety.  If SPX continues lower the 2650 target is still hanging out there.  That would fulfill the head and shoulders objective.  A break down of an H&S pattern often sees a retrace rally back to the neckline.  In this case, that would be around 2800.  The 20 and 50 DMAs are still considerably higher than that if the market really gets some upside kick. 

Who knows what will be tweeted overnight these days that will affect the market.  If nothing bad comes out tonight maybe we get a bounce tomorrow.  There was a FED speaker out today talking about the possibility of a rate cut.  That was mostly ignored today, but might bring in some buyers tomorrow.


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