Chart Talk {05.16.19}

I know the market has been through a patch of volatility this month. We're set to give back some of this week's gains here at the open.  However,  if you take a longer term view you can see that so far all we've done is step back from another attempt to make a run at breaking out of this trading range we've been in for the last 16 months or so.  We were very overbought at the beginning of May. Viewed against that lens then there is nothing abnormal about stocks taking a breather in order to catch their bearings.  China was just the excuse for this bout of selling.  It more than likely would have been something else if the trade talks hadn't been put on ice.  

As to what happens next, watch for clues as to how the market reacts if this rally continues in the next several weeks.  Many would view it as bullish if we continue to head higher after this decline and decisively breach our old market highs.  However, another failure at those levels would be seen by some as a more negative signal.  A triple top at old highs is viewed by many as the moniker of a failed rally.  In that instance the probability of more volatility in the weeks or months ahead couldn't be discounted.

Chart is from Tradingview.com although the annotations are mine.  You can double-click on the chart above to make it larger.  I will post here Monday and then will be traveling for the next few days.  Expect something then at the end of next week depending on when I return.

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