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SPX 2700 frustrates Bears.... but your time is coming soon!


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#1 dTraderB

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Posted 28 June 2018 - 07:52 PM

Never take this market for granted, whether bearish or bullish, just go with the flow, up or down. I did that today and had a great day, down and up. It looks bullish at the close today, just above the 50ma, more than 1% from the lows, but you might be shocked if you think this market cannot go down tomorrow and make a lower low. No saying it will, but it is possible. 

Realistically, the market should rally into the holiday and then expect more declines. 

---

 

This is not my opinion:

Screen-Shot-2018-06-28-at-5.42.48-PM.png

 

Thursday was another frustrating session for bears as a day that started with so much potential failed to deliver that big draft lower. This was the third day the market challenged 2,700 support, but rather than accelerate lower, supply dried up and prices rebounded.

Bears claim their time is coming, but is it really? If they couldn’t deliver the goods with such a perfect setup, what makes them think waiting a little longer will make a difference? Trade war headlines are as dire as they can get with Trump and China already threatening to tax all the trade between the world’s two largest economies. At this point things cannot escalate an higher. How did the market respond to this latest round of bearish headlines? With a lethargic, drawn out, two-week slide that barely gave up 2%. Everyone who has been doing this for any length of time knows market crashes are breathtakingly fast. Sell first and ask questions later affairs. Yet here we are two-weeks later, still waiting for the promised crash. The cold, hard truth is if it was going to crash, it would have happened by now.

Bears have been gifted everything. Horrible headlines. Violating key support levels. The largest one-day selloff in months. Yet they are unable to do anything with it. Instead of crashing, this market is holding up amazingly well. Respecting 2,700 support for four days demonstrates strength, not weakness. If this market was fragile and vulnerable, there has been more than enough to send us tumbling. Yet here we stand.

Bears claim this market is too complacent and that alone is proof we are on the verge of a collapse. And I don’t dispute that this market is crazy complacent. But that’s not a surprise. After years of getting burned selling dips, only to watch prices rebound higher without them. Traders learned to ignore the bad news because they assume everything will work itself out in the end. But even though this market is extremely complacent, bears fail to realize complacency can last for years before it becomes a problem. As we are witnessing, complacent owners don’t sell spooky headlines. Without supply, it is near impossible for selloffs to build momentum and it only takes modest dip-buying to prop it up. And that is exactly what is happening here. Confident owners are refusing to sell the trade war fear mongering and that lack of supply is keeping a floor under prices. No doubt this bull market will die like every one that has come before it. But this is not that time. I fear markets that cannot rally on good news, not ones that refuse to go down on bad news.

Before anyone accuses me of being a perma-bull, two-weeks ago I warned readers to be careful as we approached 2,800 resistance:

This has been a mostly sideways market since the March lows and the best trade has been buying weakness and selling strength. Nothing has changed. Two-weeks ago we should have taken profits into that strength and this week we should be buying the subsequent dip. Everyone knows markets move in waves, so get with the program and trade the waves! The market could stumble a little further and even test the 200-dma near 2,670, but that is just a test and it is still a buyable-dip. I know I sound like a broken record, but some things are worth repeating. If this market was fragile and vulnerable to a crash, it would have happened by now.

Even though the market is acting well and the path of least resistance is definitely higher, we cannot forget risk is a function of height and the market moves in waves. If this is the highest we’ve been in several months, that also means this is the riskiest place to be adding new money in the same number of months. In addition, the strong move over the last week leaves us vulnerable to a subsequent down-wave. We are quickly approaching 2,800 resistance and we should at the very least expect the market to pause. We entered the slower summer season and many big money managers have flow off to their summer cottages. Without their big buying, we shouldn’t expect a large directional move. Things still look good for our medium-term stock positions and long-term investments and we should leave them alone, but for short-term swing-trades, this is a better place to be taking profits than adding new money.

If the broad market is setting up for a bounce, then the FAANG stocks are in even better shape. They have led us higher in the first six months of the year and they will keep leading us higher over the next six-months. Keep doing what is working and that is buying-and-holding the market’s best performing stocks. Everything will likely continue consolidating through the summer, but we are setting up for a strong fall season.

The same cannot be said for Bitcoin. What is already low keeps getting even lower. This time we fell under $6k support. That means virtually every buyer over the last nine months is sitting on losses. Many of them breathtakingly large losses. BTC has turned from the thing that will make everyone rich to the butt of every joke. No one is heaping praise on bitcoin anymore. Instead most people are too embarrassed to talk about their BTC losses. These things reverse in a sharp capitulation bottom. Given this meandering wallow lower, we definitely haven’t reached capitulation levels yet. This thing won’t be over until we plunge dramatically lower and then rebound decisively. Maybe that will happen following a dip to $4k. Or maybe we need to fall even lower than that. Until then, expect the pattern of lower-lows to continue.


Edited by dTraderB, 28 June 2018 - 07:54 PM.


#2 dTraderB

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Posted 28 June 2018 - 07:59 PM

From TUM DUY, well-respected FED WATCHER:

 

Yield Curve Still Flattening Relentlessly

 

"The flattening of the yield curve by itself does not necessarily indicate trouble ahead. It’s inversion (a negative spread) or nothing when it comes to using the curve as a recession signal. But we are moving closer to an inversion, close enough that an inversion this year cannot be ruled out.

How will the Fed react to a yield curve inversion? They can heed its warning as arguably the most reliable recession indicator or decide this time is different. If this time is not different and the yield curve signals recession in the making as in the past, then continuing rate hikes would be a clear policy error that would tip the economy into recession.

The day of reckoning for the Fed may soon be at hand. With the yield curve continuing to flatten and the 10-2 spread falling to a meager 33 basis points this week, an inversion before the end of the year is not out of the question. At that point, the Fed will need to choose between sticking with their current rate path or heeding the recession warning of the yield curve and pausing or perhaps even cutting. The latter option could send stocks higher while recession lurks behind the former.

Money flew to the safe haven of U.S. treasuries this week as investors weighed the potential impact of trade wars and shied away from stumbling emerging markets. With the Fed still signaling further rate hikes, the weight of these flows fell on the long end of the yield curve instead, pulling down the gap in rates between 10 and 2 year treasuries to just 33 basis points.
Charts & Commentary here:

https://blogs.uorego...g-relentlessly/



#3 CLK

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Posted 28 June 2018 - 08:02 PM

It might be a good day scalping a tick or two here and there, about it though. The market is going nowhere up or down, it's a flat summer market, expect an even worse sideways eoq Friday tomorrow. Bulls have nothing right now either, else we would be at 2800.


Edited by CLK, 28 June 2018 - 08:02 PM.


#4 dTraderB

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Posted 28 June 2018 - 08:22 PM

I Have Great Faith in Fools...

Earlier today, we compared the market's mood toEdgar Allen Poe's Tell-Tale Heart. The thing about a heartbeat is that it's actually made of a two-part action (diastole and systole), contraction and expansion that are part of the same process. That too seems like an apt metaphor for markets: While the process—trying to handicap the chances of a trade war—remains the same, some days it brings losses, and other days gains.

Thursday was marked by the latter. The Dow Jones Industrial Average climbed 98.46 points, or 0.4%, to 24,216.05, the S&P 500 rose 0.6%, to 2716.31 and the Nasdaq Composite added 0.8% today to 7503.68.

Yet while the outcome may have been different than yesterday, the narrative is still tariffs. Perhaps it's just relief that we appear to have gone a whole day without dramatically negative new posturing?

Of course, that could change tomorrow, and indeed, Tigress Financial's Ivan Feinseth warns that despite his optimism that the U.S. won't plunge into a trade war with China or Europe, "it seems now that the market will not have a clear direction upward until the issues of trade are resolved." As we said yesterday, plenty more ups and downs may be ahead. 

At least the upcoming second-quarter earnings season might offer some upbeat catalysts to spur the market to new highs, or so bulls hope. CFRA's Lindsey Bell thinks that we may be in for "the second quarter in a row for earnings growth of greater than 20%, something that hasn’t been recorded since 2010." But before you get too excited, know that Bell believes that stocks will likely react much as they did to first-quarter results, when "stellar reports were viewed as a 'sell the news' type of event."

Nonetheless, U.S. stocks' gains are in stark contrast to the emerging market world, as the Shanghai Composite slid 26.28 points, or 0.9%, to 2786.90, currencies continue to plunge against the dollar, and the MSCI ACWI fell below its 200-day  moving average. Plenty have been calling the recent EM weakness a buying opportunity, but Vermillion Research's David Nicoski warns that "With the breakdown in price and relative strength, we expect additional weakness ahead."

 

Some might see that as good news—pain in emerging markets might spur China to the negotiating table. Of course, it could also lead to more calls for protectionist policies, and given how long the tariff spat has dragged on, no side may be particularly eager to lose face.

Pride, of course, was the motivation for Montresor's revenge—"I learned he had laughed at my proud name"—in another Poe classic, The Cask of Amontillado. While the markets may be able to roll with prolonged posturing, countries need to make sure that they don't find themselves walled into a corner in negotiations.

 

https://www.barrons....pain-1530222121



#5 dTraderB

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Posted 28 June 2018 - 08:34 PM

MW-GL702_spx_ra_20180628111623_MG.jpg?uu

The stock market is days away from setting a bearish record 

The Dow and S&P 500 are 10 trading days away from their longest corrections since 1984

https://www.marketwa...cord-2018-06-28

 

 



#6 dTraderB

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Posted 28 June 2018 - 08:41 PM

China's strategic moves & policies to counter Trump's tariffs can have a big effect on US and international equity & bond markets. 

 

"The Chinese yuan plummeted 3%--its lowest this year, hitting a six-month low against the dollar (USD). During the session, the yuan was down more 0.5% to against the USD for the third straight day in a row. There hasn’t been a drop this dramatic since China’s August 2015 devaluation where the currency fell 2.8% in just two days. 

The fall is post a period where its growth was strongest. This move is in concurrence with an increase in trade tensions with the United States, igniting concerns that China might engage in devaluation as a policy tool. It should be noted that China’s currency is not fully floating as it is managed, this previously sparked comments on the country being a currency manipulator. This sharp movement in the currency signals that Beijing wants a weaker currency while the cloud of a trade war persists. Please note that a 10% depreciation can counter the Trump tariffs at a 10% rate.
 
Additionally, China’s state-run newspaper wrote that the nation should engage in “self-defense measures” against the Trump tariffs. "



#7 dTraderB

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Posted 29 June 2018 - 08:07 AM

Physically, I am here, but mentally I am not, can't wait to take a few days off. 

Will put in some wildly optimistic QQQ SEP PUT limit orders, maybe even SPY also. Will monitor a few times per day, will be back evening of July 4. SPX could rally to 2780, even higher, next few sessions, or swoon to 2645 or lower. In other words, anything can happen, DUH!

 

Another opinion:

TGIF – Markets Close Q2 In the Red for the Year

by phil - June 29th, 2018 8:35 am

What a rally, right?

It's funny how excited people can get over nothing and, if you listen to CNBC or the rest of the Financial Media, you would think this market is completely unstoppable because we bounced off 24,000 on the Dow yesterday but that's only because they assume you are an uncritical viewer with no memory and no ability to step back and look at the big picutre which, as you can see from this Dow chart – does not actually look all that thrilling – even with this morning's 0.5% pop in the Futures.

The Dow opened 2018 at 25,250 so we're about 1,000 points lower (4%) at the moment and the S&P is basically flat at our 2,728 line and the Nasdaq is higher at 7,100 from 6,700 so call it 6.5% and the Russell is up 100 at 1,650 (also 6.5%) and the NYSE (the broadest index) started the year at 12,900 and sits at 12,500 so down 400 is -3% for the year.

So it's a mixed bag and not too exciting and, of course, this is the last day of Q2 with a very low-volume holiday week approaching which means a lot of the action we're seeing now is window-dressing and not at all to be taken seriously. 



#8 dTraderB

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Posted 29 June 2018 - 11:46 AM

The phony fake Trade war has resumed?



#9 CLK

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Posted 29 June 2018 - 02:10 PM

How you like that flat trading all day after the first hour ? Futures didn't do that, steady all night,

booking premium as usual, must be nice being a market maker.



#10 dTraderB

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Posted 29 June 2018 - 04:22 PM

Oh yeah, the con game always get the newbies!

 

That's why I day-trade most of the time.   

 

Note how the dip-buyers thought they had a sure thing but were taken apart by the late sellers.