We finally got the dip down although not quite to 3000 but certainly close enough. Much of the drop though was caused not by profit-taking, but by investors disappointed in the economic data which continues to show more strength in the economy than the Fed may want when it comes to cutting interest rates. Many analysts and investors who originally thought July would see an 80% chance of a Fed rate cut only to have those hopes dashed when June’s employment number beat estimates easily. The chance of a rate cut fell to 20% until last week when Fed Chair Powell indicated that the June employment data while nice to see, did not change their outlook. That sent the percentage to over 90% for a rate cut to happen at the end of July. But today’s economic data showed strength exists in the economy and the consumer is not hurting but instead spending. Consumer spending can easily spook the Fed who worries constantly about inflation and spending indicates consumers have money in their pockets. Spending can lead to inflation. By the end of the day the media was back on the “no rate cut” bandwagon. It’s hard in our world where there is so much media all struggling to get readership and “clicks” on ads to survive and pay the bills. By the close then, investors were worried that perhaps there would be no rate cut in July and now talk of no rate cut in August has many wondering if a rate cut will still happen in July. The 5 minute intraday chart of the SPX for today shows a pattern of indecision, but not panic of any kind. The VIX jump to above $13 but closed at $12.86 up 1.42% on the day but certainly not sending warnings of further drops to come.
SPX 5 minute intraday chart Jul 16 2019
Advance Decline Numbers Outlook for Wed Jul 17 2019
Here are the market breadth indicator signals along with advance decline numbers from the S&P 500 Index and NASDAQ Index from the close of trading on Tue Jul 16 2019.
Members should review the signals before trading resumes on Wednesday.
As well there were trades in the Market Direction Portfolio on Tuesday and more planned for Wednesday.
The market breadth indicator analysis and outlook is for FullyInformed Members.
Market Breadth Indicator – Advance Decline Numbers Outlook For Wed Jul 17 2019
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