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Market Update

Easter/Passover Market Catch-up $SPY

April 18th, 2017 04:04

Thin Holiday Trading

U.S. markets were closed on Friday along with most markets in Europe and down under.

U.S. markets are open today but Passover began on the 10th and ends tomorrow night, so most of Wall Street is on break. Top this off with Europe and Australia continuing to celebrate Easter today, and trading is thin worldwide.

Rally Fizzle

The past month saw lower trading with March SPY ending lower than February. This is the first time markets were lower month over month since the presidential election. And the trend has been lower still.

Are we due for a deeper correction or are we just digesting the big moves?

Tough to say yet, but the daily chart is struggling to stay above moving averages, even with today’s bounce.

Low Volume Bounce

Today’s move higher in markets may be nothing more than a low volume bounce. SPY is trading higher today but with this low volume, it could be an insignificant move.

We need to see how markets move in the coming days and weeks before we can know if they will continue trending to the downside as the recent rally starts to peter out.

Inflation Stall

The labor department reported on Friday that consumer prices fell in March for the first time in over a year. Retail sales continue to slide as well. Inflation is barely holding the 2% mark that is the benchmark for the Fed to raise interest rates at least two more times this year.

Will the Fed change their tune on the number of rate hikes it will make this year if inflation doesn’t keep pace?

Geopolitical Unrest

Threats from North Korea coupled with missiles and bombs in the middle east leave market makers jittery and for good reason. It leaves us with a sense of instability which brings on fear. And fear equals volatility.

Correction Time?

This could be just the excuse markets need to correct more deeply from their recent record breaking highs.

Recent SPY high is 240.32. Currently at 234, it’s off  less than 3% from that high. A mere 5% correction would take the SPY down to the $228 area which is a significant area of support/resistance that you can see in the daily chart below.

The next stop, a 10% correction, is not far from where this rally started.

The Bull Argument

All that said, I will also point out the double bottom SPY has put in with today’s move, which can also be seen in the daily chart below.

And I note that the weekly chart still looks quite strong with a mild consolidative bullish pennant showing. It will take a lot more distribution to make that chart look like it’s correcting with any significance.

It is certainly possible that this bull market isn’t over.

The pull back in recent weeks may be nothing more than that….an opportunity for more players to enter the game. Time will tell and I am happy to impart what I see with all of our followers.

Here is the chart:

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The author, Danielle Spandau is a seasoned trader/investor and educator also known as The Trading Wife.

IMPORTANT DICLOSURE:

All information and/or opinions contained herein are impersonal, for informational purposes only, and do not constitute a solicitation or offer to sell securities or investment advisory services. The views and opinions expressed in this article are those only of the author(s) and do not necessarily reflect the opinions of Alpaca. If you are considering making an investment, you should consult with an investment professional.