Stock market futures are higher this morning led by China ADRs as President Trump, citing promising trade talks, has called off the March 1st tariff hikes.
Those calling for a long drawn out trade war with China are perhaps rethinking their perspective this morning. The price action is doing the talking this morning, and over the last few weeks. Those calling this sharp rally since the December lows a "Bull Trap" are probably busy penning their next fear mongering piece for publication, because that's what they do... in spite of the price action!
Since this rally started in December not many were expecting a swift recovery of asset prices. Bearishness had reached a fever pitch. Just as it did at the lows in February 2016. And those bearish prognosticators that were calling this rally a BULL TRAP at $SPY $265, were saying much the same thing back then at $SPY $188, and $150, and below.....
Who would have thought after that nasty last 2018 swoon that we'd be this close to fresh record highs in 2019, less than two months into the year? I penned this non-Marketwatch article as the bull traps were being set a month ago.
Despite all the negative headlines and fear mongering this market has fought its way back to a key support/resistance level.
The last time the market was up against this line of support/resistance was the first trading day of December. After a long weekend back then Trump had said trade talks were going very well, just as he did this past weekend. There are a lot of similarities, however at least two big differences. (1) Today is the VIX has broken through key support and is trading in the 13's. At the start of December the VIX was over 16. (2) Price action is back in buy the dip mode, from the December sell the rip mode. Momentum for the market is up.
Earnings price action has told a bullish story. While earnings reports did not always impress, with names like $WDC and $LRCX seeing a huge rally in spite of less than bullish earnings reports. The same could be said for $AAPL and $IBM. Financials like $GS and $JPM saw strong upward price action after their reports. The price action was saying that the story is going to be better down the road. The market is forward looking. When you see a sub-par earnings report get bought, the market is looking ahead, not behind, and sees better numbers down the road.
This morning we are at that point where rubber meets the road. A break and hold above key resistance, and we could very well be looking at record high prices coming over the next few months. Amazing right? Bull trapping our way to record highs.
Some my perspectives from 2019 so far: