Vacation Week

Late last week I discussed Friday’s special “expiration” date and why it could have had a wild close.  Well, nothing special happened going into the close last weekend.

While discussing the S&P 500 I said: “It is also above the 200-day moving average, but found support a little higher.  The S&P was supported on the ‘round number’ of 2700.00, and two-standard deviations below its regression line. Two good support levels, indeed.”  There was weakness again at the open today, but these same two levels supported the market yet again. The low of the ES this morning was 2698.50, before it staged an impressive rally to 2722.00 and being positive for the day.

The Dow Jones, however, was another story.  Although the Dow had a decent recovery from its low of the day, it failed to get into the green.  What’s more, as of this writing, the entire day’s range is BELOW the 200-day moving average. If there are more trade war scares, or if Friday’s monthly jobs data are bad, the Dow Jones Industrial Average may be the first to sell off with high velocity.

Given that this is an American vacation week – July 4th – trading will be light.  Monday wasn’t bad, but Tuesday is a half-day, and the market is closed Wednesday. Thursday and Friday may also be light, especially in the afternoons.

The next chart is the S&P 500.  It is also above the 200-day moving average, but found support a little higher.  The S&P was supported on the “round number” of 2700.00, and two-standard deviations below its regression line.  Two good support levels, indeed.

Unless there is further trade war talk (and that could happen at any moment), these levels should help the market stabilize and advance next week.