Holding Pattern

The markets seem to be in a holding pattern on Monday, which is not that surprising after last Friday’s massive one-way move higher.  The Dow Jones, for example, had a staggering reversal off of its low of 555 points. After a move like that, taking a breather, or going into a holding pattern, is normal.

To be sure, the market is higher as I type this, but volume is amazingly low, and the range is small.  In the S&P 500 futures, for example, about 80% of Monday’s range occurred within the first 30 minutes of the day’s session.  For hours and hours the market traded sideways.

In the chart we can see that the Dow bounced off of its 200-day moving average last Thursday and friday, but is slowing down at the downward channel high. There is also resistance from April 30th that the market must contend with.

If the Dow can close above the 4-30-18 high of roughly 24,500, then traders will probably try to push it to 25,000 once again. But the mega-volatility has not vanished, and one must also be prepared for another reversal.

Interesting times!