FREDAlert!
Volume 11, Issue 1
May 10, 2019
Since we were unable to do our weekly conference call live, we will give this quick update on the state of the equity markets through yesterday’s close.
Thursday, SPY came down to the 284 level mentioned in the weekly, in fact broke it, but then turned up and closed above it, near the high of the day (the high of the day was 287.12, and the close was 286.74). The low was 283.30, interesting as this filled the gap from 3/29 to 4/1 2019. Note that the market is acting normally – the daily stochastic is coming down in what could become a buy recycle. This low from yesterday 283.30 has a good chance of holding, as several others (MDY, DIA, and NYA) are all close.
The next levels to watch if Thursday’s low breaks are 38% retracements in the 271 area on SPY, then our targets of 264 to 266 come into play. These are 50% retracements, and support levels. Below those would suggest a more significant break, and a possible test of the December lows, could occur. The McClellan Oscillator is in the -150 area, an oversold reading suggesting a rally is close at hand. We would like to see a down open, and an up close, with the opening price and the first ½ hour of trading being the low of the day.
We would be adding to strong stocks or fundamentally strong ideas here. Remember that even if we do retest the December lows, the amount of new lows should be significantly less if the retest is successful, and the strength of the Advance/Decline line should suggest that such a test would be successful. Your stocks may not make new lows. Look at stocks like RNG, MCD, PEG, and BX (some of which are in our Sector Review). It would take a lot to get them through the December low.
We show daily charts of SPY, MDY, DIA, and NYA so you can see these stochastics.
