Yes, the market had a soft landing on support with decent follow through today.
With better than average volume, bulls will surmise that this is a bottom.
And since price pays, with the last 2 days action, technically, we can say that for now, the worst could be over.
Yet, examining our triage of macro factors, what has really changed in the last 3 weeks?
The U.S. Dollar (Daily chart), which I featured 2 days ago, gained in strength. See chart in image below.
The US Dollar ETF (NYSEARCA: UUP) is close to resistance at 25.93.
That was the last high in 2017 before the major downfall.
The 20+ Year Treasury Bond ETF (NASDAQ: TLT) lost ground today and look like the price could be heading closer to 110. Hence, rates firmed further. See “monthly” chart in image below.
The US Oil Fund ETF (NYSEARCA: USO) fell. See “weekly” chart in image below.
However, the 50-week moving average it traded below until October 2017, remains intact. In fact, this is the first test of that breakout in a year.
That will be a key retest of the 50-week MA. We imagine that level will hold, thus keeping the uptrend in place.
So, other than a dip in oil prices, what has changed?
The villian that many blamed for the correction-higher rates-just got more villianous.
Unless the rates take a tumble and why should they, to my mind that spells that this is a tradeable bounce that could be short-lived.
S&P 500 (SPY) – 270.25 will be pivotal for Thursday.
Russell 2000 (IWM) – I did not find this action that great considering it could not close over 150.67. New month. Keep in mind the 23-month MA at 149.67
Dow Jones Industrials (DIA) – It held 250.24 which is the pivotal number for Thursday.
Nasdaq (QQQ) – Could not close above the outside day candle-I take this as a sign of weakness.
KRE (Regional Banks) – It did gap above 53.69. Best hope for more rally if that level holds, especially if it clears 55.
SMH (Semiconductors) – Managed to close right on the 23-month MA at 93.76. First key area to clear and 90 best underlying support.
IYT (Transportation) – Held 182.67. And still has work to do-like hold 180.81 its 23-month moving average.
IBB (Biotechnology) – Below the 200 week and 23-month MA right now.
XRT (Retail) – Failed 47.25 the 50-week MA. And closed below the 200 DMA. Like to see this take those areas back and close over 47.80 before getting excited.
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