This Morning’s Log Entry

5/30/19 Thursday

Month-end rebalancing, a short-term bullish chart pattern and a short-term bullish RSI divergence have odds favoring a bounce in equities right here.

A lack of response (yet) out of the Administration to China’s retaliatory rhetoric this week should bolster a short-term rally. One tweet however and traders are poised to move the market notably in either direction. 

A conciliatory tweet might be hard to produce given that China is now bowing its neck a bit, although issuing one I suspect would be hugely bullish for at least a day or three. Politics present a headwind for Trump risking coming off soft at this juncture, but I’m certain May’s selloff in stocks has his attention.

This morning’s strong 2nd estimate of Q1 GDP and continued low jobless claims should momentarily allay some of the worries over a weakening economy.

As I type the Dow’s up 80 pts, SPX and Nasdaq are each up .5%. A fade of this morning’s tepid rally would not bode well for the near-term outlook, although a tweet could change (or exacerbate) things in a hurry.

Beyond tweets, there’ll need to be some real progress by way of a tariff-removing trade deal, and, frankly, a different strategic approach altogether to international trade relations going forward to see equities sustainably above this year’s highs.


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