Market Overview
The SPY closed below the 21 EMA yesterday for the first time in over a week, and today it’s following through lower, now sitting at 763.09 with the 21 EMA right overhead at 764.59. One close below is not a trend change, but two consecutive closes under it starts to shift the tone. The 8 EMA at 766.02 is now above price as well, so the short-term stack has flipped on us temporarily. The 50 day at 760.85 is the next real support level to watch if sellers press this further. VIX at 16.2 is calm, so this looks more like digestion after a strong run than anything alarming. However, against that this market is stuck where it is in my opinion until rates cool off. The probability of Trump having to compromise with respect to Iran increases by the day with rates where they are. I still believe he is going to pull a rabbit out of the hat prior to mid terms. It is not in his character to give up so just be careful about getting too bearish. Cash is always king in these situations or some sensible put selling - remember an opportunity cost is not a drawdown.
