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All Time Highs

Futures are indicating the markets will push to all-time highs today. This is based on the news that there appears to be some kind of “Tariff Truce” with China.

This being the 4th of July week, it’s a little like Christmas – the trading week is short because the 4th falls on a Thursday. This means Friday is likely to be a lower-volume trading day as most will extend their vacation into a 4-day event.

Expect the shortened trading week to have lower volume and exaggerated movements. Looks like a strong pop higher for Monday. The question is whether or not there will be much follow-through. Markets could drift even higher this week. It’s next week we should see the reality check.

For the time being, enjoy the ride. Setting all-time highs is useful on the technical front. It demonstrates the market has more room to grow before a correction. The question is, can we hold this level, or is the the last bright blink before the star burns out?

We’ll need a bit more info before we can make that call. But based on the still solid underlying economic data, it looks like things can keep pushing higher yet.

For now, keep an eye on the 3000 number for the SPX. That’s the next big fat round number market participants (and yes, probably most of the algo’s too) are keeping an eye on.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Uncertainty is the New Certainty

Markets found some footing last week after a multi-week slide. However, futures are pointing to a drop yet again, presumably because of the most recent Trump Tweet regarding Iran.

So flip a coin. The SPX found a decent amount of support at the 2800 level. There also appears to be a decent amount of resistance around 2900. Not sure there’s a reason this market will break out of this range for the week. After bleeding off most of the year’s momentum in the past two weeks, we could be in for some sideways action while participants sort out the news.

For now, look for a sideways move for the week. A move of the SPX below 2800 — even intra-day — could be a sign of further downside on the horizon. There seems to be little catalyst (short of a formally inked trade deal with China) to push the market through any of the upward resistance right now.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Danger Zone

After a pretty good rally from the December 24, 2018 lows, the markets may be in for a tough week as they enter the ‘danger zone’ of resistance.

During the slide from the October 2018 highs, the markets oscillated around the 2600-2650 or so levels. These numbers are not precise, but they’re close enough to be ‘big fat round numbers’ the market can latch on to. And many traders will likely be paying attention.

The last time the markets hit this danger zone, they rallied higher but failed. Ultimately, the markets dropped lower. This is a set-up for a test of this support/resistance level, as previous support, once breached, becomes resistance on the way back up.

Right now the sentiment in the market is delicate. While the beginning of 2019 has been a nice rally off the prior-year lows, the economic environment is quite uncertain. Fundamental data may say things are okay, but the market is still searching for bad news. And so far, all news is viewed with suspicion, and greeted with the benefit of the doubt.

You need to look no further than the 10-year treasury yield to see that markets are nervous. Theories about for how and why the US economy is actually in far worse shape than the data would indicate. What seems to be sorely lacking is the actual data that says we’re in for a major recession. You know what they say about self-fulfilling prophecies though?… Look hard enough and it will appear.

For this week, the market looks to be opening down, likely because of negative news out of China. But we also have the ongoing government shutdown and a few other data points the markets can muse about as well. So look for negative sentiment early on.

On the downside, look for 2535 as support for the SPX. On the upside, 2625ish should be the first tier of resistance. 2535 is simply last week’s opening price for the SPX. If we lose all of the gains from last week, expect some follow-through and more downside movement as markets like to re-test lows before sounding the all-clear. And if we really are entering a bear market, the probability of this re-test of high.

Should a breach of support occur we we’ll discuss things at that time. For now, even a week at a time looks to be a wild ride.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.