Market Analysis

Bear Hugs

Today is January 16 and $ES is 300 handles above the December lows. Bears look like they could use a hug. Not a single retrace since the January 4 Powell “balance sheet flexible” speech. Hug away bears, but what’s really happening here are technical reconnects still. Over the past few days we’ve seen indices reconnect we key MA’s and today some of the laggards have caught up. Below some charts following up to Return to the Crime Scene.

The basic key MA I’m talking about is the 50 day moving average:

$SPX:

$RUT:

$NDX:

$NYSE:

Mission accomplished as outlined in Imbalance and balance achieved.

But it’s not only the 50MAs, no Sir, as chance will have it we’re also seeing reconnects with the quarterly 5EMAs:

$NDX:

$SPX:

$DJIA:

These were support during the rally phase in 2016-2018 before the breakdown in December.

Speaking of $DJIA it’s reaching key resistance:

Hugs everywhere.

None of this means the rally is over, only a reversal would confirm this, but it is of note that key reconnects have occurred and indices are approaching key resistance zones.

Don’t be surprised if bulls need some hugs soon as well.


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Categories: Market Analysis

3 replies »

  1. I have a feeling that all the 50DMA’s will be penetrated this week now that the FED has once again stepped in to backstop the market. There won’t be an interest rate hike until at least mid year if at all. That’s all this market needed to hear, and Powell did exactly that not long after the Christmas Eve sell off. It seems that FED has a new role and that is stopping any serious market decline. I guess that’s their charge after the 2008 bloodbath. Can’t let that happen again, no matter what the cost. The next pull back will be an important test, but it probably won’t happen until the S&P/DOW/NAS are way above their 50 DMA. The low for this decline is probably in and the next decline won’t come close to breaking it. Different FED Chair, but looks like the same old game. I’m sitting on a fair amount of short positions that I guess will be showing me a loss in the next couple of weeks. I thought this FED Chair would let the markets run their natural course. Now I feel really stupid!

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