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Tuesday, October 6, 2020

Stimulus on hold 10/6

SPX tanked after it was announced negotiations on stimulus were put on hold by the president.  The result was a key reversal day down.

Breadth went from +70% before the announcement (with SPX at a new bounce high) to -59% at the close.  That is quite a reversal.  

 The futures are holding at the 50 SMA for now.


The bull pressure chart show the mid term (middle) and long term (bottom) lines are still bearish.  Only the short term lines (top) have a bullish cross.

The breadth and ticks have shown decent strength on this bounce.  However, there has been some short bursts of selling as well.  I thought some and maybe many people were buying expecting more stimulus.  Until that is back on the table, I wonder if buyers might be a little less enthusiastic than in recent days.  Many news events are short lived and are quickly retraced.  Every once in a while something comes along which lasts for extended periods.  The market is a little vulnerable as the bull pressure chart shows.  The next couple of days will be important.  If people were buying for reasons other than stimulus, then the bulls should come back out to play in the next day or two.  Otherwise, we are likely to see a retest of the recent low.  I am in wait and see mode until the market decides whether this news is important or not.  Maybe the talks will restart and send the market higher again, but we can't predict that.

Peace and good health to all.


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