Is Tesla Really Heading For Orbit?

The almost 1 trillion-dollar farm bill was passed by Congress yesterday, but it was passed over by the markets as all the key indexes closed mostly flat.

The exception was the Russell 2000 (IWM), which was unhappy and closed down-1.41%. This was strange considering the farm bill was designed to help the domestic economy and received approval from both parties (a rare event ). 

On a relative basis, the trading ranges for stocks were relatively muted, most likely due to sheer exhaustion.

As Geoff pointed out yesterday the slope on the 10-day moving average on the SPY was up, but he wasn’t convinced that meant that markets were about to turn positive.

In fact, today the Russell 2000 made new closing lows for 2018, as did Retail, Regional Banks, and Transports. This shows further erosion in the underlying economic picture.

On a more positive note, the Dow Industrials seems to be holding the bullish hammer pattern from Monday’s brutal drop.

Tesla, which we highlighted here on Tuesday, continues its tear, powered by forces far greater than lithium-ion, such as human emotion and analyst upgrades. It is now approaching 385, which is the level it needs to obtain escape velocity.

A technical bounce is still a possibility as stocks are still short-term oversold and the price action is compressing, which means the move, either way, could be huge, really huge.

Mish will be back on Monday after receiving her award from Real Vision. (I will let her tell you more about it then.)

S&P 500 (SPY) 269.40 is the number this must clear to improve outlook.

Russell 2000 (IWM) 147.50 is the number we need to clear to change our short-term perspective to bullish.

Dow (DIA) 233.20 is important support and the 2018 low made in April. And a close under 240.50 would make that more likely. A close over 252 would be bullish.

Nasdaq (QQQStill needs to clear back over 168 to get positive for a mini to swing trade.

KRE (Regional Banks) This sector is in deep trouble and I would not touch it

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