The A LOW continues to bounce. Keep in mind the last time we called A LOW, the market rallied for a whopping 7 trading days before rolling over.
These lows are occurring not because of strength but because of weakness. After all, the DOW dropped 1,100 points in 3.5 days last week and 2,000 points since the recent high in just 9.5 days. Bounces do happen. As we stated, the DOW was 900 points stretched away from the longer term 200 day average. Eventually, bounces occur to get back to the norm. Also, it is end of month window dressing week even though window dressing is illegal and does to happen.
As we mentioned this weekend:
OIL PRICES are providing a huge expense cut to the consumer and business. It is no accident AIRLINES are now showing great relative strength.
The 10 year yield has been coming down.
A ton of bulls had and have turned bearish. We do not mention names. (contrary indicator)
So we bounce!
We are watching:
Salesforce.com (CRM) is gapping up this morning. Other names in the group are up in sympathy. In the recent past, all these gaps have been sold off. Something to watch. Would be good news if any gap holds.
The G20…in that it feels like expectations are so low. Any surprise would be a surprise.
China…yes China…it seems the lows continue to hold. A confirming break to the upside would be a huge help to markets as this area has led the market down. Not there yet.
The president…we cannot believe how many people who lambasted Obama for targeting industry and companies are all of a sudden thrilled with Trump for doing the same.We are completely against a president targeting businesses for acting in their best interest, for targeting a central bank who is doing nothing more than slowly raising rates to a whopping 2% and for talking down anyone or anything that remotely disagrees. We want free and unfettered markets…but looks like that is an impossibility with this president. And don’t get us started on the continuation of more and more threatened tariffs.
Could this A LOW become THE LOW? We are all for it but we must tell you, even with yesterday’s 100 point gain, small and mid-caps were nicely down, new lows expanded and the a/d was very weak. We will need to see a few more bullish cards come out of the deck. Today looks to be better but don’t blink. It’s a long day. As we stand, this is A LOW from stretched, extended and oversold conditions but we will gladly take it.