Will the 200-day Moving Average Hold Support for the SPX?

Last Friday’s market fail was technically disappointing as a the week ended lower.  The 200-day moving average (currently at 2593) barely held up.  In fact, it was breached intraday last week.

The technical set-up is now in messy territory.  On a day-over-day basis, it looks like the 200-day moving average is holding up as support.  However, on a week-over-week basis, the data is less conclusive.

It appears a significant area of support is setting up at the 2585 level.  That was the previous low mark in the current pull-back.  It is also barely above the 2582, which is the current tipping point for the Market Macro Indicator.

While the futures markets have been higher over the weekend, the talk about trade wars continues to escalate.  It seems unlikely both China and the US would cut their noses off (economically speaking) to spite their face.  So this is likely more about rhetoric and negotiation posturing.  But it’s certainly got the markets spooked.

More importantly, the futures markets seem to do little to point out the future these days.  Other than confirming the immediate trend in the markets — and perhaps providing some insight into the extreme highs and lows in the trading day — there seems to be less correlation between the futures and the market than in prior months.  So take the data with a grain of salt.

The 200-day moving average appears to be the place to watch.  If that holds, it looks like a trading range between 2600 or so on the downside, and 2700 on the upside until earnings season gets rockin’ in another week or two.  If earnings continue to shine, the uptrend can resume (as long as tariff talks moderate).  If not…   well, let’s not borrow trouble just yet.

For now, the algo database has shaved another point off, dropping to 28% long.  The marcro’s are holding steady and remain long.  One thing’s for sure, it ain’t boring!

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