Chart Talk {A Review}

I posted a chart at the beginning of the month detailing what the S&P 500's ETF SPY was telling us.  Basically I detailed back then a market that had rebounded nicely from its early 2018 sell-off and was now struggling as it had finally climbed back to near its previous highs.  Here's an updated and unannotated chart of the SPY.  The chart is from Tradingview.com. You can see that we basically touched those previous highs and then sold off.  The excuse du jour is money problems in Turkey.  I'd argue that we were so overbought that butterflies flapping their wings in Canada might have been used as the excuse for markets to for some period of time head lower.  

I've purposely waited until this morning's open to show you what's happened today as we've started trading.  You can see that at least for now markets have taken a stand and are trading higher, although so far the open looks like it's being sold.  We'll have to watch what happens now for clues to the days ahead.  Stocks might rally and attack those old highs again or they could head lower as the news right now gives them an excuse to do so.  We're in the high part of the summer lull season so anything is possible.  I'd note also that the last few days selling hasn't alleviated the longer term read by our work that we're still very overbought.

Again I want to stress that for how we try to explain what's going on in terms of our three period outlook {short, intermediate and longer-term} we have to consider the probability that we're in a period where the markets might struggle a bit.  So far our reading of this is more of a short-term orientation.  Our longer and intermediate more optimistic views  remain unchanged.

Back Thursday.

*Long ETFs related to the S&P 500 in client and personal accounts.  Short S&P 500 in a personal account as part of a separate individual strategy.