Markets at midday are continuing to hold an up bias into the midday on Monday Aug 26. The five minute SPX chart below shows the wide morning swing from the opening which was around 2875 to the morning low which failed to break or reach 2850.
SPX Chart – 2850 Support
2850 remains an important support level with 2860 almost as strong.These two support levels have continually slowed declines in the market and at present, they are doing the same again as they support the morning rally.
The lunch hour has seen the SPX break above the 2875 opening high. This is a bullish sign at present.
SPX to midday on Aug 26 2019
Advance Decline Numbers – Midday
Volume on both the S&P and NASDAQ is a bit lower which is bearish.
SPX Numbers
New lows on the S&P are at 105 with 78 new highs so new lows are still above 100 and ahead of new highs. This is bearish.
65% of all stocks on the S&P are advancing with 28% declining. This is bullish for the start of the afternoon.
NASDAQ Numbers
The NASDAQ is much weaker. There are 98 new lows and just 27 new highs. Basically for every stock making a new high, there are 3 making new lows. This is very bearish at present.
60% of all stocks are advancing and 31% are declining so at least among stocks on the index, the ratio is 2 to 1 in favor of advancers. This is bullish.
Midday Summary
The rally today is suspect and is more likely the result of the major meltdown on Friday Aug 23. That downturn caught investors by surprise, which is one reason volumes were so low on Friday despite the sell-off.
The early afternoon today could see the SPX index try to hold above 2870 or 2865 but the late day trades are probably going to be lower and that could push the index back below 2860 or even to 2850 by 4:00 PM.
The question now will be whether markets can build from today’s break in the selling to start a new base to once more move higher. We have had 3 major sell-off days in August. It is rare to see a market experience 3 major pullbacks and not see it fall a bit further first before finally finding a stronger base to recover from. If that is the case, then today’s market move is just a bounce.
Historically the final week of August has not been kind to stocks. That’s just another reason to stay cautiou this week as markets leave August behind.
I have entered most of the watch list trades for today. Make sure to also review the market direction portfolio trades done today.
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