1. Moving the markets

An early ramp ran into resistance around mid-day when sentiment turned bearish, and sellers pulled the major indexes not just off their high points but also to a close at the lows of the day. Good thing the clock ran out, or we might have seen another reversal with nothing to show for.

As it turned out, the major indexes managed to score some modest gains with early support coming from the main recent driver of market direction, namely boosted expectations that a US/China trade deal might materialize in the coming months. Translated, that means to me that we’ll be riding this roller-coaster a while longer until something definite and verifiable can be reached between the jawboning parties.

Other positives out of China were news that they might allow foreign corporations greater access to their markets, and that they will lower tariffs on US autos and increase soybean purchases. While these are steps in the right direction, they were simply not enough to keep early upward market momentum going, as headlines about Cohen and National Enquirer disclosure offset the exuberant mood.

In the end, the modest gains certainly were not enough to conquer any bearish tendencies, as our Trend Tracking Indexes (TTIs) improved slightly but remain firmly entrenched below their respective long-term trend lines.

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1. Moving the markets

An early follow through to the upside from yesterday’s rebound ran into resistance quickly, as traders were more comfortable adopting the mantra “let’s sell the rip” rather than believing the rally had substance to it.

The Dow and the S&P 500 surrendered all gains and closed in the red with the Nasdaq barely hanging on to the plus side. Opinions vary widely these days about the Santa Claus rally with one analyst referring to it as a “violent and crushing move higher” taking shape this month.

While that is certainly possible, but maybe not probable, the question in my mind remains whether that would be just another bear-market blow-off, or an actual break back into bullish territory. I guess we’ll have to wait for the answer.

The news headlines were the same in today’s choppy session. Optimism around US/China trade talks faded in a hurry with market momentum losing even more steam on Trump’s threat of a government shutdown, as border-wall funding talks with Democratic leaders turned into a nothing burger.

Markets hate uncertainty the most, and that’s why we ended up at the unchanged line. For the time being, our bearish view remains alive and well with our Trend Tracking Indexes (section 3) continue to be positioned below their respective trend lines.

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1. Moving the markets

Stocks took an early dump to start the week, with the Dow being down at one point by 500 points, but a mid-day slow and steady rebound assisted the major indexes to slip back above the unchanged line by a moderate margin.

I can’t tell if the Plunge Protection Team (PPT) was at it again or if the recent adage “Sell the rally” was suddenly reversed with a “buy the dip” mentality but, after the sell-off we’ve seen, some hopeful bottom-fishers were simply bound to show up.

Intra-day, things did not look so good, as the S&P 500 took out its October low of 2,604 by touching the 2,583 level, which is in striking distance of the 2018 lows made back in February during the first crash of the year. Some projections are calling for new lows, should a close below the critical 2,616 number materialize.

The S&P’s death-cross was also confirmed. It simply means that the widely followed 50-day M/A crossed the below the 200-day M/A, which validates that we are locked in bear market territory, a position which our Domestic TTI has been signaling since 11/15/18.

European and Asian markets were not so lucky, as dip buyers were conspicuously absent punishing their major equity indexes. After Europe closed, US stocks started their levitation followed by a short squeeze helping the US markets being the only one with a green close.

Looking at the big picture, not all sectors fared well. SmallCaps tumbled again to their worst level since September 2017, while the Financials were suffering, as bank stocks collapsed for the 4^th day in a row.

It goes to show you that a few green numbers are meaningless when most markets are trending lower confirming the current bearish bias. SMART money has recognized that by getting out of equities, as this chart clearly shows. The Globally Systemically Important Banks Stock (GSIB) Index is saying the same thing.

Until a new bullish theme is clearly confirmed, being on the sidelines makes the most sense, since a new “market puke” can occur suddenly and without warning.

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