Yesterday we saw the S&P enter what most economists are saying is “correction territory” as the trade fell below the key 200-day moving average at 2588. Traders often use the key moving average as a bull/bear line where above is bullish and below is bearish. The reason for the drastic fall yesterday stems from the POTUS tweet slamming Amazon. The theme of his tweet was that the major tech player is costing taxpayers billions of dollars through the United States Post Office. That led all indices sharply lower albeit off the lows yesterday but still a very bearish day if you are a chart technician.
This morning we are sharply higher with the S&P up 16 points at 2592 and more importantly above the 200-day moving average which lies at 2590. Normally when you see a big move down in the S&P like we witnessed yesterday money would flow into safe havens like treasuries but if you watched how bonds traded late afternoon, they finished flat on the day. Bonds didn’t believe the breakdown in stocks yesterday so this morning they are down a full point and are currently trading below yesterday’s low at 145-31. So, continue to watch price action in Treasuries and also action in the dollar Yen as they often are good indicators of where stocks might go. I might look at the June S&P near the 200-day moving average at 2589, risking 15 points and look for the market to close above that level and march on higher to 2641 level. Everybody seems so bearish on stocks right now and I like to be the contrarian here and say most people are wrong about most things most of the time.
E-mini S&P 500 Jun ’18 Daily Chart