On Tuesday, the market opened mixed and near flat.
At 10 AM, the top was in. The major indexes faded into the close as volatility evaporated from the market.
All four indexes ended the day modestly lower…
- Dow Jones -0.1%
- Nasdaq -0.4%
- S&P 500 -0.2%
- Russell 2000 -0.1%
If you sat on the sidelines, you weren’t alone. It turns out not many wanted to trade.
- Trading volume was about 75% of the 10-day average
- It was the least amount of trading the market has seen in 6 weeks
And despite the slide in the indexes, bears failed to fail any real victory. Of all listed stocks…
- 49% finished higher
- 47% declined
Shares of China-based retail giant Alibaba (BABA) surged more than 14% yesterday.
- The company plans to split into “six independently run companies”
- Buyers added about $32 billion in market cap
The United States Commodity Futures Trading Commission (CFTC) is suing Binance and its founder for “Willful Evasion of Federal Law.”
- Binance is one of the largest crypto exchanges in the world
- The move drove withdraws totaling $850 million
- Bitcoin^ remains resilient, trading near $28,500 at writing, up about 5% over the past 24 hours
Sector Round Up
On Tuesday, 5 of the 11 sectors ended the day with gains.
At the top…
- Energy (XLE) +1.6%
- Materials (XLB) +0.5%
- Industrials (XLI) +0.5%
At the bottom…
- Technology (XLK) -0.5%
- Healthcare (XLV) -0.6
- Communications (XLC) -1.0%
The market is showing a lot of indecision which favors the bears.
But low volume and lack of volatility favors the bulls.
And then there’s the chart…
It’s easy to overcomplicate a chart.
If you’re having trouble determining the direction of a chart, step back, and ask yourself a simple question…
What would a 5-year-old say?
Young minds lack empathy. They’ll tell you what they see…
What do you see on the chart above? We drew a line from the price action a year ago to today. The charting is pointing down.
And despite the rally from October to February (which we told everyone we were buying), our bullish thesis died when the chart stopped supporting it.
We continue to look for a reason to flip. We’re not there yet.
- The VIX moved lower, which favors the bulls
- RSI levels are all neutral
- The Put-to-Call Ratio moved to oversold—The market is betting on lower prices
The primary reason we flipped bullish in October was timing.
October has a long history of killing bear markets. And the market tends to favor the bulls from October through March.
But the lack of conviction in the bulls suggests the rally is over.
On Friday, you’ll get the April outlook.
We’ll explain why the bears have the upper hand right now.
*BLPH support at $7, resistance at $8
* **FCNCA support at $850
*BMEA on watch
CMPR support at $40
^AEHR support at $35
PYXS support at $3
TERN resistance at $11
INZY support at $4
ETNB support at $16
ALDX support at $9
NAAS resistance at $6
PRQR support at $3.50
DTC resistance at $7
VKTX support at $12
NRDY resistance ta $4
ACCD resistance at $14, support at $13
^SQSP on watch
^IOT resistance at $18
KC support at $6
AUPH support at $10
RELY support at $16
RIOT support at $8, resistance at $10
**Trading For Keeps is a registered DBA. Its parent company maintains deposits at First Citizens Bank.