S&P 500 Bulls Stunned By Late Reversal
The S&P 500 finished the day flat despite being up nearly 60 bps with just 30 minutes to go. The decline into the close was a bone-crushing one. More impressive was that it was against a market with a close imbalance of about $2 billion to buy. So, it was a stunning finish to the day, and more importantly, it probably left the Bulls a little bit demoralized after two rough days in a row.
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This left the S&P 500 below the 10-day exponential moving average for a second day and broke the rising uptrend. Today also created a doji, and it is not uncommon for a big down day to be followed by a doji, followed by another big down day, as we saw on March 26, 27, and 28.
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I know tomorrow is a Friday heading into a three-day weekend, so that complicates the matter, but it would seem that all it takes is for the sellers to actually show up, and the last two days have been good examples of that. Volumes in the futures have been a bit better the past two days, with most of the volume coming later in the day. Again, this goes to the point that all it takes is the seller showing up.
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Meanwhile, most signs point to the dollar weakening further, as noted by the USDJPY. The broadening wedge pattern suggests the USDJPY will likely return to 140.
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Gold has been sending mixed messages lately, but the only thing that appears consistent is that it is still in an uptrend. At this point, it is right in the middle of the recent trading range. I could just as easily argue for it to go back to the highs at 3,440 as I can for it to test the uptrend again at 3,175.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. ...
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