Monday, June 4, 2018

Monday Morning Chartology


The Morning Call

6/4/18

The Market
         
    Technical

            The S&P went nowhere on the week, though it did it with a lot of volatility indicating skittish investor psychology.  The 100 day moving average seems to be the magnet that pulls the index back from any follow through in either direction.  Granted there was a lot of cross currents on the fundamental side; but a year ago, that wouldn’t have made a difference since good news was good news and bad news was good news.



            The long Treasury soared above its 200 day moving average on Monday and spent the rest of the week retreating.  It ended slightly higher on the week, below its 200 day moving average, over its 100 day moving average, in a short term downtrend and a long term uptrend.  Its performance suggests a bet on either a slowing economy (falling rates) or a safety trade.  There is a whole menu of fundamental events to support either case.



            The dollar retained its upward momentum, though it is now hugging the lower boundary of its very short term uptrend.  It finished in a short term uptrend and above both moving averages.  In UUP’s case the performance suggests a stronger economy (higher rates) or a safety trade.  Again, you can point to the news item of your choice to make either case.  Since a safety trade are an alternative for both bonds and the dollar, the inclination is to lean in that direction---except the GLD belies that.



            No amount of good or bad news seems to impress GLD investors.  Of all the confusing pin action across stocks, bonds and the dollar, this is the most confusing.  It remains stuck below both moving averages and in a short term downtrend.



            The VIX had a volatile week (1) spiking to then falling back from its 100 day moving average [now resistance], (2) rising above its 200 day moving average, then failing to revert to support on the final day of our time and distance requirement, (3) trading over the upper boundary of its short term downtrend, resetting to a trade range and then falling back below that former upper boundary after one day.  Given the downward momentum from other indicators, I am leaving the short term trend as down.



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