E Market Briefing For Monday, Aug. 19

Oscillating S&P moves are not merely confounding swings responding to news regarding China, tweets from President Trump, or even interest rates; although all of those do and will trigger fast-paced immediate reverberations that are challenging to traders, and confusing to many investors.

So despite having anticipated this rolling series of alternating moves; we've tried to convey a serious technical aspect to this past week's (next week as well) roller-coaster ride, which is really clear (that's why we focused on S&P recent low points, as traders worked to create 'a cushion' above danger).  


What that reflects is fairly determined efforts not just to run-in short-sellers, but to hold-the-line (and there is a lateral line) represented by the intraday lows of the S&P during the past two weeks. Friday's levitation aimed, more than anything I suspect, to create some trading room to allow swings.

What I mean by that is the ability for markets to absorb good or bad stories, especially as relate to China trade or interest rate nominal moves at these absurdly low levels, without triggering 'algorithmic' cathartic moves that sort of 'force' the market into defining what passive-investing managers (there's that risk again, of non-thinking dumping or buying of baskets of stocks).  


Having what I call a flexible 'cushion' of space, allows this news-sensitive or low-liquidity thin market, to oscillate in response to developments which are not definitive, without immediately compelling major portfolio changes by the very managers who were (as forewarned) so obliviously complacent both in the Spring's 'distribution under-cover of a strong DJIA and S&P'; and then in similar fashion during a projected despite reprieve rally into early-mid July.

Presuming we have a couple weeks without definitive resolution to either a Fed quandary; or the trade negotiations (with speculation about the Meeting a couple weeks hence); some of the pressure off determining the next huge move (or primary trend impact) from the next sharp 'daily basis' swing has a good shot not to 'force' a trend breakdown or breakout prematurely.  

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