E Market Briefing For Tuesday, Feb. 20

Phenomenal persistence was anticipated into the mid 2700’s as we’d approach the holiday weekend. However the way it held together in the face of ‘protectionist’ omens from Commerce Secretary Ross, was altogether reflective of how this fearless market remains on a ‘mission’. 

What’s the mission? As unjustified as it is we have speculated it’s really a drive to recover everything (and then more) lost in the projected rocky late February action leading in the ‘flash crash’ drop we called for ideally occurring in early February. This market doesn’t even express concern about ‘protectionism and retaliation’,  but ultimately that’s a real issue.

A recovery from the high-level double bottom at the March S&P’s clearly developed 200-Day Moving Average? Yes, we thought so; although with it being too textbook, and at a high level we were (and are) unwilling just to throw caution to the wind and suggest high-level investing beyond the ‘trader only’ short-term rebound view expressed when calling for what I termed an ‘automatic rally’ off the double-bottom washout. Chasing it up here is now ludicrous; even if it manages to advance further. A serious question might be whether any further strength should be lightened up. 

This past week we called for Oil to rebound (it did a bit from high 50’s to the low 60’s); but by no means moving back toward 70 barring a crisis of course. And we thought that the S&P (and Nasdaq especially) needed oil stocks to assist their effort as traders rotated from techs into others in the well-oiled drill of using rotational shifts to prop up the market pattern.

Free trade debates aren’t terribly impactful though they could be over a period of time. The levies proposed on steel and aluminum are not new from a broad sector area as there have been some. For several years, in addition, there have been political pressures to dissuade using cheap Chinese steel. I pointed to the San Francisco/Oakland Bay bridge as a case in point. However, additional levies might pressure private industry, which is being discouraged from global outsourcing in many ways now.