{"id":50820,"date":"2019-12-04T01:25:13","date_gmt":"2019-12-04T09:25:13","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=50820"},"modified":"2019-12-04T01:25:16","modified_gmt":"2019-12-04T09:25:16","slug":"t2108-update-191203","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2019\/12\/04\/t2108-update-191203\/","title":{"rendered":"Above the 40 (December 3, 2019) – A Quick U-Turn for Speculation in the Stock Market"},"content":{"rendered":"\n

AT40<\/strong> = 48.5% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200<\/strong> = 50.2% of stocks are trading above their respective 200DMAs
VIX<\/strong> = 16.0 (up 7.0% and went as high as 18.0)
Short-term Trading Call<\/strong>: neutral<\/p>\n\n\n\n

Stock Market Commentary<\/strong><\/h2>\n\n\n\n

It was fun for the short time it lasted. <\/p>\n\n\n\n

The speculative turn in the stock market<\/a> came to an abrupt end with a fresh set of trade headlines. During a press conference in Europe, President Trump shared his latest revelation about trade negotiations: it turns out that a trade deal, partial or not, might be better done after next year’s Presidential election. The stock market disagreed…for now anyway.<\/p>\n\n\n\n

The S&P 500 (SPY) lost 0.7% in a continuation of Monday’s selling pressures. Buying pressure at the lows of the day was enough to create a hammer candlestick that is often characteristic of a bottom. I did not wait for a confirmation and decided to buy a SPY call option expiring in two Fridays. At the lows of the day, sellers finished a 3-day reversal of nearly a month of gains. These kind of sharp u-turns are characteristic of the reversals that follow a period of deep complacency.<\/p>\n\n\n\n

However, the market has experienced plenty of these bouts of trade-related angst only to exit stronger than before. I think this episode will play out the same way. This week’s selling put a small dent in the near relentless gains the S&P 500 achieved after the idea of a Partial (Phase One) Trade Deal was floated in early October. Today’s headlines of course confirm what skeptics like me assumed: there was never a firm deal on the table.<\/p>\n\n\n\n

\"The
The S&P 500 (SPY) lost 0.7% after forming a hammer-like candlestick.<\/figcaption><\/figure><\/div>\n\n\n\n