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Wednesday, July 31, 2019

Update 7/31 Tyrannosaurus Debt: A “Deep Dive” Look at Debt and its Burden(s)

The FED cut rates .25 and stopped QT, but the market sold off anyway.  I am sure there was pent up selling because a lot of people did not want to sell before the cut happened.

SPX nearly made a new low for the month before it bounced.  There was a lot of volume today.  Breadth was -61%.  New highs were 310.  New lows were elevated again at 54.  SPX closed below the 20 SMA for the first time since early June.

The futures had quite a move down when Powell said this was not the start of a lengthy easing cycle.  Then there was a big bounce when he said there might be more cuts.  The futures are below the 100 SMA, but have not confirmed a break of the 20 or 50 MAs due to the rapid move.

The red count crossed above the red line, but is still below 50. 

I am sure today's flash move down ran a lot of stops, but it is not clear if it signals a change in the market.  We will have to see what transpires over the next few days.  It is not unusual to see the move after the FED announcement be completely retraced.  We are now moving into the Aug. to Oct. period which is rather famous for sizable sell offs.  It is a good time to be vigilant especially because we had weak internals the last few weeks.  Maybe the bulls will strike back tomorrow, there was a rate cut after all.

Interesting article on debt.  Tyrannosaurus Debt: A “Deep Dive” Look at Debt and its Burden(s)


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