Look at this hourly SPX chart which shows how the market opened at almost the low of the day and closed near the high during the past three days. Today, the recovery from the lows was remarkable with the SPX closing smack dab in the middle of the critical support zone 2760/65, but just below the 20ma (2766) and about 14 points below the 50ma (2776); market bounced off the 200ma at 2744.
So, basically, the important levels tomorrow are 2744, 2766, and 2776.
My VIX hourly and daily indicators are off the BUY mode so I am looking for today's intraday rally to continue but am not optimistic it will go above 2780; on the other hand, a decline below today's potential swing lo at 2744 will indicate this market is still bearish mode.
BARRON's carried an interesting discussion about the "futility" of the DOW & SPX but one should note the vast number of bulls who want to reassure everyone that all is OK, this is merely a trade spat, things will be fine, and we will soon reach new S&P highs. I don't buy that, two many want to spread that narrative, they seem too eager to do so, as if they themselves do not believe it. See link below chart.
The Bull's Last Gasp?
With the Dow down for five consecutive trading days even before Tuesday's action, this losing streak already ties with the mid-April slide as the longest-losing streak of 2018. And they match in terms of "futility," writes Frank Cappelleri, technical analyst at Instinet, in his morning note.
The Dow Jones Industrial Average has slipped 331.64 points, or 1.3%, to 24,655.83, while the S&P 500 has fallen 0.7% to 2753.77, and the Nasdaq Composite has dropped 0.8% to 7687.72.
What did Cappelleri mean by "futility" of the markets? He says: "It ties for the worst in terms of price action, even before the gap down this morning. That hasn't been much of a focus with tech doing so well—Tesla (TSLA) and Twitter (TWTR), whatever." Though neither the electric-vehicle maker's nor the social media company's stocks are doing particularly well today. But what investors should remember is that losing streaks in the last five years have ultimately led to gains 20 days to a month later, says Cappelleri. Of the previous 16 times of 5-day straight losses, the Dow ended higher 75% of the time with an average gain of nearly 3%.
For the S&P to hit higher highs, it needs to break above its March ceiling of 2800. "It doesn't have to happen immediately, because this is a large pattern, but the break above the top will trigger higher highs," he says.
The overall pullback will likely be short-lived, wrote Robert Sluymer, technical strategist at Fundstrat Global Advisors in a note published Tuesday morning that echoes Cappelleri's. "Given the intermediate-term backdrop...it is premature to become bearish," he said, adding that it might be time to ease exposure in former leadership areas.
One sector worth keeping an eye on: Consumer discretionary. Cappelleri warns investors to keep an eye on the Consumer Discretionary Select Sector SPDR ETF (XLY), which has been on fire after investors seemed to have gotten over the retail rout. It ended a 10-day winning streak on Friday. However, the explosive action is not sustainable, Cappelleri contends, and given the stocks in this sector seem to be one of "the most extended portions of the market," it poses significant risk, he says.
https://www.barrons....nues-1529428607