May 10, 2019

S&P 500 (SPY)

I could not have created a more well-crafted blueprint for today’s trading session. In the morning commentary, which I hope came across as entertaining –it was meant to be, I said:  “I’d be perfectly fine with an early morning retest of 2836 followed by a rally higher to finish the week above the downtrend.” That is precisely what happened. A steep sell-off early today even slightly below our 2,836 level, which I loved. It allowed the market to test that level and for it also act as resistance. The market responded positively, by rising above it and then moved up the balance of the day to close above the downtrend I pointed out.

It looks as if 2,895 is acting as resistance for the moment, but  I don’t expect that to last.

The index managed to close above 2,880.  Assuming all things remain “uneventful” over the weekend,  I think today’s close suggests that we continue to rise and move back to our highs. One other aspect of the technical chart I’d like to point out is in the RSI half of the chart. The RSI managed to fall right by the downtrend that formed in January 2018 and bounced some; a positive a new uptrend may be forming.

I’m not going to go through the regular charts today. I’m wiped out and still have a lot work ahead of me this weekend. But I’m glad that perhaps some rational thinking came back to the market at the end of the day. If the bond, fx and oil market are any indication of where the equity market is heading, then things should be fine, and equity prices should continue to rise.  You can watch all here The Equity Market Doesn’t Seem Rational

-Mike

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