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Tuesday, March 10, 2020

Update 3/10

There was strong late day buying based on fiscal stimulus talk.


Both sellers and buyers were at work today.  The futures gapped up hugely only to find sellers that took SPX negative.  There was a tick distribution signal during that move down.  However, buyers showed up around yesterday's low and caused a tick accumulation signal in the afternoon.  The last time we had both signals in the same day the last one was distribution.  Maybe this combination will form a short term bottom.


The bull pressure lines have a story to tell tonight.  The short term lines are positively divergent into this low.  However, the long term lines have issued a caution flag.  The red line has reached the threshold that could be the start of a bear market.  That does not mean we are in a bear market, but how the market behaves over the next several weeks will be important.  To clear this signal the mid term green line needs to reach its blue line at +67%. 

As long as there is talk of fiscal stimulus and the virus news does not get really bad the market should have a chance to bounce from this setup.  At least some money managers are buying a little stock.  If the virus starts taking hold in other countries like it did Italy the market could head south again.  But then again, fiscal stimulus talk could keep a floor under the market.  Needless to say volatility is still high and one should be very nimble to participate in this market.  This situation could take several weeks to work itself out whether to return to bull market conditions or break down again.

Peace and good health to all.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.