Still Cleaning Up Overhead Supply

JC Parets
August 5, 2019

We've wanted to be erring on the long side of stocks if the major Indexes are above their 2018 highs. That has been the strategy for the second half of 2019. But what if we're not above those highs? Then what?

Here is the S&P500. Is this a successful retest of former resistance or a failed breakout? If we're not above 2900, the risk is either sideways or down:

Here is the Dow Jones Industrial Average. If we're not above 26,600 then the risk is either sideways or down:

Here is the Nasdaq100. If we're not above 187, then the risk is either sideways or down:

When we're looking globally, the S&P Global 100 already broke below last years highs. If we're not above 49 in $IOO then the risk is sideways or down:

We'll see how this week plays out and if the bulls are able to step in and finish absorbing this overhead supply. The trade has been to look for stocks to buy if we're above last years highs. If we're not, then a more neutral position makes the most sense in stocks.

Meanwhile in the currency markets, the US Dollar tried to break out above this key 98 level last week, only to fail by Friday's close. This will be another one that we're watching closely:

From failed moves, come fast moves in the opposite direction. The 4th quarter last year in Stocks was a great example of that.

There is no reason to be a hero. If we're below overhead supply, we need to respect that.

Let me know what you think.

JC

 

 

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