Light News Favors the Current Momentum – Support Will Be Tested

Posted 9:30 AM ET - The market has declined since the US/China trade negotiations soured a few weeks ago. We saw a small bounce two weeks ago and we drifted down to test support last week. I still believe that the 200-day moving average will be tested soon. The news is very light this week and that favors the current momentum. Official PMI's, ISM manufacturing/services and the jobs reports will be released next week. Trading activity should be quiet today as we nurse a holiday hangover. President Trump visited Japan and he said that a trade deal was possible by August. Swing traders should remain in cash. It is too early to consider shorts after such a 4 month rally. We need to see multiple technical breakdowns before we turn bearish. At this juncture we have to assume that the test of the major moving averages ($276) is a buying opportunity. Day traders should be cautious this morning. There isn't any news to drive the action and the volume will be light. Chances are the range will be established in the first hour. Fade the extremes. Look for a quiet week with a range between $280 and $285. . .

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