Mid-Session Update Good morning, Glad to see your majors are up...

Mid-Session Update

 

Good morning,

 

Glad to see your majors are up and dealing with some important moving averages and retrace levels.

 

E-mini futures are well above the slightly top-heavy profile formation from Friday's RTH session.  At first it looked like we were setting up for a balancing day but at mid-session SPX is up 29 points and over the 2 April’18 low.  So far the action is bullish but thin as we came right out of the initial balance without hesitation.  NYSE A-D lines opened slightly positive arenow at +2073 and NYSE breadth is 6.09:1 while NASD breadth is 4.74:1.  Consumer discretionary and the small caps are leading. SPX daily chart. 

 

Oil is up 2.75% and that is one point of support or the broader market. Gold is once again just below an important retrace area, helped by the USD which is off by a half percent and well below the 100day moving average.  ZN futures are slightly lower after being flat for the first part of the session.

 

China's economy is starting to show signs of damage that are directly related to the trade war.  This gets the US administration chuffed and the senior Chinese trade official has in fact showed with the deputy trade representatives at today’s meeting.

 

Short term bulls hope the president, the Democrats and the Chinese are capable of short-term pragmatism and that we get a bullish catalyst - in the form of a positive spin on the Beijing meetings and/or some form of government funding via piecemeal legislation to fund individual government agencies for a year if no other deal is possible.  In that event - if we can keep over the April low of 2553 - we could eventually find ourselves through the 30 day vpoc at SPX 2570.  Further out we have the October low at about 2603 in the SPX.  After that, SPX would start to encroach on the confluence of the major downtrend line and the 50% retrace of the decline from 3 October that comes in at 2640.  How the market reacts at that level would depend on how volume shows up on the catalyst strong enough to get us that far.  You already know the downside levels so I won't go into that here. It's worth repeating that declining moving averages make monthly time frame bulls squeamish.  They want to see those longer term averages turn up on something tangible and sustainable.   In the meantime, have fun watching for short covering and maybe even taking part as the bears waddle back into their dens for the minute.  Be aware though, the VIX is only flat as of lunchtime here.