US Market Update
Technicals and short covering have driven a low volume rally in the SPX which now sits around 2632 and near high call resistance.
Conventional reminiscing was in vogue over the weekend and today. Bulls are showcasing charts that reveal retail investors leaving, declining sentiment, very high OI in VX futures and high short interest in index derivatives. Their utility as a predictor of contrarian moves is venerable if stale.
Another facet of that conventional thinking is that earnings are coming quick and bulls hope they offset the effects of trade war rhetoric that some see as a negotiation process with a grand outcome for all.
I still don't see much attention being given to the idea of that potential trade war as symptomatic of a much larger geopolitical instability with psychologically harmful consequences in both the short and medium term.
Bears think things really are different this time and that the justifiably ingrained buy-the-dip response will continue to backfire on bulls, while agnostic range traders are content to skirt the support and resistance margins like playful seal pups during white pointer migrations.
Your view of all this will depend on your personal time frames. If you are a day-to-day trader you are paying mind exclusively to techincals; and if you are swing trader with longer time frames you are also paying mind to the extraneous factors that fall within broader support and resistance levels - the kind that politician's economic advisors keep notes of. Growing technical consensus calls for a test of SPX 2450 if 2530/2550 is broken.
There is resistance at 2680 and 2700 now. It is born of price/volume history, traditional ta and derivatives positioning.
China's president will speak at Boao Tuesday and his words will be carefully parsed. Hopes for the maintenance of his generally mild comportment are said to be keeping the markets afloat.
CBO deficit estimates are out today and the market seems unfazed by the expansion in our deficits. Perhaps because of the increased expectations for GDP and decreased expectations for inflation 2018.
Retaliatory strikes for a chemical weapons attack are on the table but when it comes to punishing those particularly responsible assets, justice delayed is justice denied. There is a respect being paid to Russia at the moment. That said, the male ego is a powerful thing, even when constrained by the specter of pee-pee tapes or other kompromat - the White House today reiterated the idea that troops will soon be removed from Syria.
I would like to advise you to look to actions instead of words but that distinction seems futile at the moment. Words have meaning and always have. Only the most hardened linguistic positivists would tell you otherwise. A world where words cease to mean what they appear to mean is a world with continuous 50 point intra-session swings on the S&P futures. It is a world where VX contracts stay put. And it is a world where things can become uncontrolled at any moment.
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