No one reading this article will argue that things are deteriorating technically. We also have fundamental headaches, such as we saw from the real-estate world today. But focusing on technical action, the bears certainly have made some progress. A nice gap down now in the way of the bulls making their task of sustainable upside far more difficult. That said, we started up a hair this morning, only to see the futures fall apart just after the open. A real swoon lower with the S&P 500 falling well over ten points quite rapidly. It looked bad as the 20-day exponential moving average was getting taken out with relative ease.
However, shortly thereafter, the sixty-minute index charts got oversold with readings of 30 RSI, or lower, and back up we went. The indexes mixed with the Nasdaq down a hair, while the Dow and S&P 500 were up a hair. The bears let it get away from them as the rally allowed the indexes to all finish back above their 20-day exponential moving averages. The S&P 500 losing the 20's would be huge for the bears, but once again a tail and tails mean it won't be easy for those bears. Nothing will be easy for either side, but at least the bulls can feel better about rallying back above those earlier in the day lost 20's. A nothing day when all was said and done.
So when is bad news good news? Once again, the rally seemed to coincide with bad news from the economic world. Housing permits dived lower. The stocks in that area were very hard hit to the down side. That said, bad economic news equates to good news for rates staying on the very low side. Fed Yellen is not anxious to raise rates as long the housing market and the economy overall are struggling. The forced bull is with us and not showing too much in terms of going away.
The GDP reports are poor. Housing is poor overall, with small pockets of good news but again, overall not very good. The Fed is going to need to see consistent good news from the housing market before she's overly anxious to start her rate raising cycle. Trying to understand when she'll raise is silly. She'll do it aggressively when the economy can stand tall without her help with low rates. Still bad overall economic news leading the lower rate cycle.
Bottom line, it's all about losing the 20, and then the 50-day exponential moving averages on all the major index daily charts. Until that moment occurs, meaning losing the 20's you shouldn't even think about shorting for the most part if at all. Do what feels right to you, of course. And once we lose the 20's, things don't truly turn bearish until we lose the 50's. The numbers are as follows.
On the S&P 500 the 20's are at 1972 while the 50's are at 1949. Have to lose 1949 with force and volume to get legitimately bearish. On the Nasdaq the 20's and 50's are at 4422 and 4353 respectively. When 4353 is in the rear view mirror the bears can celebrate. Losing it on big volume would be more confirming. You can play long, but safest is playing lower beta, lower froth stocks. You know the drill. Froth is the big headache that can take this market down without provocation. Day to day for now folks. Aren't we all.
This Web site is published by AdviceTrade, Inc. AdviceTrade is a publisher and not registered as a securities broker-dealer or investment advisor either with the U.S. Securities and Exchange Commission or with any state securities authority. The information on this site has been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy of the information. In addition, this information and the opinions expressed are subject to change without notice. Neither AdviceTrade nor its principals own shares of, or have received compensation by, any company covered or any fund that appears on this site. The information on this site should not be relied upon for purposes of transacting securities or other investments, nor should it be construed as an offer or solicitation of an offer to sell or buy any security. AdviceTrade does not assess, verify or guarantee the suitability or profitability of any particular investment. You bear responsibility for your own investment research and decisions and should seek the advice of a qualified securities professional before making any investment.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.