Resistance in the 2600 Area

April 04, 2019

The markets have traded pretty much like we have been writing about, with a run-up to resistance in the 2600 area. Unfortunately, computer programs still have full control of the current market, so we are still very vulnerable to a short-term selloff. Look for a pullback in the 2450 area, which could occur over the next three to four weeks. With the current run up, this is to be expected. There has been a lot of technical damage done to the markets which causes additional volatility. On the bright side, it looks like we set a new bottom in the 2300 area.

01-09-2019 SPY

As of Tuesday’s close, the S&P 500 is up 9.5% in the last nine trading days. It has been a nice run-up, but is still lacking when taken in context. Don't forget that the index was down 15.7% over the fourteen-day period prior to this advance. In addition, the index is still roughly 7.6% below its early December close, and down 7.74% over the last 23 days. This 23-day period includes both the 14-day December decline and the 9-day surge. The broken support zone in the 2600-2630 area turns into first resistance.

TLT, the ETF of the 20-Year Treasury bonds, has had a big drop, followed by a big jump up after the sell-off. TLT looks to be running out of gas, which is a good sign that the market could be signaling a market bottom.

01-09-2019 TLT

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