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Monday, December 2, 2019

Update 12/2

This was the first serious down day since way back in the first half of Oct.  I am glad I was not trying to find things to write about during this up move. 

The first bit of news was a story out of China that there would be no phase one deal that does not include the removal of current tariffs.  The next bit of news was poor economic data at 10 AM.  That added considerably to the selling.  Breadth was -71%. 

The futures have been soaring right along.  They found support at the 50 SMA.  This is the first negative DI cross since mid Oct. 

There is a slight negative cross in the red/green count.  That is also the first one since mid Oct.  The red count is still well below 50.

SPX found its low this morning.  There was some selling late in the day, but not enough to make a new low.  It will take more selling then that to turn the market down.  However, this is the first time the bears have had a chance to do anything to this market lately.  We need to watch the next few days to see how this plays out.  The VIX spiked up sharply today as people loaded on the hedges.  It is too soon to tell if this is a start of a VIX spike or not.  The ultimate resolution may depend on whether Trump decides to increase tariffs or not. 

Trump figured out that if he keeps saying China wants to make a deal the market will go up.  Someday that effect might wear off.  It seems to be clear they are not close to an agreement on a phase one deal.  The market has had a short attention span for any negative trade comments up to this point.  However, we are getting closer to the Dec. 15 date which still is scheduled to increase tariffs.  I don't have a clue what is going to happen.  I can see where money managers might want to lighten up a little and take some profits from this rally.  A 5% pullback is not out of the question.  If the tariffs go into affect then probably a much bigger one.  Of course one good positive tweet could send the market to new highs.   Be nimble and be quick or be on the sidelines in the short term.


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