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The indexes closed another losing week with an oversold rebound in a three-day weekend. The S & P 500 and Nasdaq are down three weeks in a row, while the Dow Jones Industrial Average Index loses five weeks.
The action this week was hectic and inconsistent, with a massive sell on Thursday the most noticeable action. The movement is mainly due to various headlines dealing with the US-China trade war, but the slowdown in the economy also raises other concerns.
The most positive aspect of this week is that the S & P 500 has not exceeded the trough of the previous week around 2800. This is the key technical level. If it is tested for the third time, the chances of falling will decrease. Meanwhile, the trading range is now expanding to just under 2900.
While the bears have so far failed to break the support, the bulls have also failed to generate a positive momentum. There is very little leadership and some very weak sectors such as banks, retail and oil.
Bulls continue to hope that something positive will develop on the trade and capture the bears, but there is little sign that progress will be made in the near future.
When we take into account the negative seasonality and economic concerns, bears have a good argument, but they have always been unable to capture momentum and cause real technical damage.
The indices are in a weak position and the selection of individual stocks is very bad, but so far the support has been maintained and there is still the potential for a new surprise to make the market jump.
I still have very high liquidity and will remain patient until the conditions improve.
Have a nice commemorative holiday. I see you on Tuesday.
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