Is The Stock Market Bull Back Or Is It Just More False Hope?

Stocks pieced together a reasonably good day, and suddenly the mood from last week seems to have changed in the market. Although the market didn’t respond immediately, I believe the recent change in attitude can be traced back to last Thursday and the dovish commentary the ECB presented.

I noted on Thursday morning that the commentary was bullish for equities over the longer-term and I continue to believe that it is the case. I think investors are slowly waking up to the idea of the ECB leaning more towards easing, and that likely means that the Fed is not only finished raising rates for 2019 but could be looking to cut rates in late 2019 depending on far the ECB goes. Remember also that Draghi’s term ends this fall, and his successor will take over. It could likely mean that Draghi’s successor could be even more dovish to start their new term to get the economies moving again.

S&P 500 (SPY)

Until proven otherwise the S&P 500 is range bound. It is clear there is a genuine struggle for stocks to get beyond the 2,810 region on the S&P 500, and whether it is where sellers genuinely live, or it is a psychological level for the buyers at this point is impossible to know.

But what I found interesting when looking at the chart of the SPDR S&P 500 ETF, is that SPY already broke out. The ETF rose above resistance at 281.30. It is also showing at this point that earlier volume levels above that price are very light and that the longer-term path of least resistance at this point is higher.

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spx, spy

When we look even closer, we can see the ETF not only rose above resistance, but that resistance became support and throughout the day that support held firm.

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spy

Acadia (ACAD)

Acadia looks like it may finally be breaking out, rising above resistance around $27.20.The next level of resistance comes around $31.00, which refills the gap.

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Disclosure: Michael Kramer and the clients of Mott Capital own Netflix and Acadia

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice ...

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