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S&P 500 stalling near 2800 again

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Stocks were mixed on Tuesday with most of the broader indices tacking on modest gains, but the Dow was down 96-points because of continued selling in Boeing's stocks following the tragic crash over the weekend. That is also negatively impacted the Transportation Index. Internally there were 630 more stocks up than down on the day, and even in the Dow it was 2 stocks up for every 1 that was down despite the loss.

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We had a fair day returns-wise yesterday, and I suppose after the big rally on Monday, some follow-through buying is a good thing, but there was certainly hesitation as the indices pulled back from their highs of the day, and of particular concern was that the S&P 500 hit 2798 at the high and backed off and closed at 2791 so there is still some leeriness in that 2800 area. 2815 has been the brick wall there since the pullback from the Octobers has began.

Whether stocks are nearing a peak of that 5-month trading range the S&P has been in is the key question right now. A move above 2815 could be a green light to a ride up toward the old October highs. On the other hand the bears may have other plans and the bottom of that range is closer to 2600, so that's the situation.

The Fed is on hold and that may be a cushion for the market - or as the traders are calling it, "the Fed put", which is like an insurance policy for stocks - Similar to the post financial crisis 0% interest rates which basically helped keep stocks buoyant for 10 years. Why not keep rates at 0% all the time, you might ask. For one thing, it's not a lot of fun for retirees and bank accounts to gain no interest. Some of you may be old enough to remember the days when the G-fund was paying 8% - 9% a year. Can you imagine? It hasn't even hit 3% since 2008.

The S&P 500 (C-fund) closed higher on the day but sputtered a bit after nearing 2800. You can see the wall at 2815, but on the other side of that the index is back above all the key moving averages again. There could be a dance between the 2700 - 2815 area while investors wait for more information on the trade deal or no deal with China, the ongoing Brexit situation, and the next wave of earnings which start in April, although if that head and shoulders pattern I have talked about ever fills the right shoulder we could eventually see 2600. That might be the China "no deal" target.

The DWCPF (S-fund) was up modestly yesterday but it created a spinning top candlestick which can be a stalling pattern. I marked a couple other of those spinning tops and you can see that they preceded some slight dips before the upside resumed.

The Dow Transportation Index pulled back after the big rally on Monday and it is stuck in between the 50 and 200 day EMAs right now. The Boeing incident has put a hit on those airlines stocks so it may not be as much about the economy right now - although that may have been the case prior to the weekend - but rather a reaction to the crash.

The High Yield Corporate Bond Fund had another good day and is nearing the early March all-time highs again. Actually, yesterday was the second highest close ever after the March 1st closing high.

The AGG (F-fund) just keeps plugging along and making new highs as yields continue to drop. It is hitting some resistance right now, but that resistance is rising. Still, this one may be due for some backing and filling or consolidating in the short-term.

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

Tom Crowley

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