E Market Briefing For Wednesday, May 19

Reflation persists while the S&P meanders with mixed internal action. This is a Tuesday and turnaround efforts were attempted until almost the 2 o'clock hour, but then faltered with the downside accelerating into the close. 

To a degree this recalls Monday when the S&P failed to react favorably with a 'stimulative' comment from the Fed Vice Chairman. While allowing rebounds in this market, there's little doubt that investors have persistently used rallies to lighten-up on for some time. I'll review some of the insider sales too, and it is not impossible that both relate not only to an expensive market, but also the potential 'bring forward' sales related to a proposed capital gains tax hike.

So far the rally last week off the 50-Day Moving Average fulfills my concern at the time that it was too perfect, too-well-timed, and really an 'automatic' rally, a term that goes back to behavioral analysis of these moves many years ago.

This is not a question of investors moving to quality or sticking with big techs, as what happens when we break the recent low at the 'then' 50-DMA, will be a bit of a downside vacuum if 'algorithmic' selling kicks in then. That's where a slew of ETF's and funds holding them get killed too, finding that diversification didn't protect them. Now that doesn't mean we don't get a reprieve, but we do have just this week and next ahead of Memorial Day. This week was the likely last week to actually break the S&P if it's possible. Viewing today, perhaps so.

Oil is consolidating after a lot of late-comers jumped aboard (we've been very bullish since under 40). So not only are we not encouraging jumping in 'now', but we maintain stability prospects based on economic realities in this world (OIL).

Many major Oils have made steep cuts to capital expenditures, they speak to optimism but they are not engaged in exploration as is the past. Lower CapEx and an increasingly stringent climate policy have forced the oil majors to lower their growth plans or sort of watch demand, which is increasing. So, analysts warn that this could set the market up for a supply crunch in the coming years hence barring pressure from Russia or the Saudi's, Oil should stay fairly firm.

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