Today the market celebrated hopeful good news regarding Mexico like it was cinco de mayo, and in the process confirmed a “follow-through day” (FT day) on day 4 of its new rally attempt. Then after the close today President Trump announced an indefinite suspension of tariffs on Mexican goods coming into our country. While this news is good and should bode well for a continuation of the current rally, investors should watch the market action of the next 3 days closely. According to Investors Business Daily, stock market history shows that every bull market has started with a “follow-through day”, BUT not every FT day leads to a new bull market. Some fail. And when they do, it’s usually due to professional selling (Distribution Days) within the first three trading after the FT day.
Today’s FT day happened on the Nasdaq index, but NOT on the S&P500 index. However, the S&P managed to close over its 50day moving average, while, ironically, the Nasdaq did not. All in all, today’s action was good, but not great and reminds investors that the upcoming Fed rate decision and the China trade war are still the most important issues, for the stock market anyway.
At this point the “higher-low” we identified last week in the chart patterns of the main indexes has held. Additionally, three of our “core 4” technical indicators are now green. We believe investors can feel confident that the only way the market can go sharply lower is if Mondays (06/03) price lows are undercut. Based on our research of the history of the higher-low pattern, the markets trend should now be sideways to up while awaiting a positive catalyst.
Please note our daily study of the “math of the market” is based on the technical internals of supply & demand and our system tracks the “footprints of money”. Our job is not to make predictions, but rather to interpret the markets numbers and be aligned with its current trend. The mathematical internal indicators of our proprietary 3-stage sell-signal discipline are objective and factor out the noise. Over the next few weeks the market will decide if the “higher-low” sequence will hold and allow prices to rise higher through the summer.
Have a Triumphant day! ®