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Bulls and bears at a stand still

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The market continues to play give and take as the bulls buy up every dip lately, and the bears are selling every spike keeping the indices in a tight trading range. The Dow, which was up 94-points at its peak Monday and down 41 at its low, closed up just 2-points. We saw some relative strength from the small caps and particularly the Transports yesterday.

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Look at the tight range that we've seen on the S&P 500 over the last 10 days, after it first made its way back to the 20-day EMA. It has held just above the 50-day Simple MA but can't seem to get a push off of it.



There were about twice as many stocks up yesterday on the NYSE as down, but on the Nasdaq there were slightly more down than up. Some of that strength in the NYSE may have had to do with another rally in oil.

But as we talked about yesterday, there is a lot of turmoil in the world right now. Yesterday we got threats from Russia, and a build up of 150,000 Chinese troops on the North Korean border. Don't forget the weak jobs report on Friday and the delay expected in tax reform, yet we're still talking about a slight gain in stocks. I wonder what will happen if we ever get some good news.

The S&P 500 (C-fund), as mentioned above, is hugging the 20-day EMA and holding just above the 50-day simple and exponential moving averages. Something has got to give so the question is, will it be event driven, fundamentally driven, or driven by a capitulation (give up) from either the bulls or the bears? Ideally earnings drive the market and earnings season is coming upon us so perhaps that will be the catalyst. That sounds better to me than a big move driven by a Fed statement or something like a geopolitical event.




The DWCPF (S-fund) remained above the 50-day EMA for a third straight day and made its way back above one of the descending resistance lines that we have been watching. It's a good start but there is more resistance overhead. I like the looks of the inverted head and shoulder pattern forming.




The Dow Transportation Index closed above the 50-day EMA for the first time in over a month. It remains in what looks like a mix of a bull flag and a possible "F" flag. We'll look for 3 to 5 closes above the 50-day EMA or a move above both flags (9250) for confirmation.




The EFA (I-fund) was down slightly as it flirts with the bottom of its rising trading channel.




Recent weakness in the Japanese Nikkei has put pressure on the I-fund recently after it broke down from a large wedge formation and fell below the 50-day EMA in March. It got a snap back rally yesterday but remains in the new downtrend. The large open gap from December finally got filled and the index bounced from there so perhaps that was the downside target?




The price of oil rallied yet again yesterday and it is closing in on the 2017 highs already after that correction. This has helped the Transports, and some of the other larger stock indices.




The AGG (Bonds / F-fund) had a little bounce from Friday's decline. It remains in both a short and longer-term rising trading channel, but being close to the top of the longer-term resistance has me leaning bearish on bonds.




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Thanks for reading. We' see you back here tomorrow.

Tom Crowley


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S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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