Perhaps the tariffs are going to weigh more on the economy and rate hikes have gone too far, but the fact of the matter is this market is floundering. Volume was up across the board as the market hit another day of distribution. The Russell 2000 led the market lower closing the session lower by nearly 1.7% while the Dow held up relatively well closing lower by almost .7%. Energy was a big winner as a group with Crude jumping once again over supply fears. Information technology, Consumer Discretionary, and Financials were the hardest S&P 500 sectors hit during Wednesday’s session.
Financials are in trouble as XLF is set to see its 50-day moving average cross under its 200-day moving average known as the death cross. Extreme caution is warranted at the moment and there is no need to play hero trader. Stay the course and obey your risk management process. We have seen many profit stops hit and it would not surprise us to see a few more hit before we close out the month of June. Stay on your toes.
We have two days left of trading in the month of June and it would not surprise us if we see the indexes move lower. The bright side of things is we needed to take a breathier. July is a great month for gains and we have seen the past few Julys produce some great gains. It does not mean we kick off into more highs, but it would not surprise us to see the market get some relief from this current selling in July. Where we go from here is anyone’s best guess. We have tremendous weakness and we’ll have to see what kind of reaction rally we get from the market. Will our leaders hold up or continue to sell-off? Watching the action of our leaders will be very important as we proceed. Stay patient.
Ending the week on the AAII survey we see the number of bears jump to 40.8%. It’s the highest mark since the week of April 12th. If we do see selling worsen into next week it would not surprise us to see the number of Bears surpass April’s level. Bulls dropped to 28.5% and it was quite a fast drop below 30, but it isn’t a surprise given the action over the past week.
We hope the last two trading days of June are fruitful. Stick with the plan and enjoy the weekend!
