The equity indices have been in a slow-motion downtrend since May 1. What has been most interesting about the action, however, are the counter-trend bounces after bad news.
Last week the indices jumped for three straight days after being pounded on negative trade news Monday.
This week the indices were down again on Monday as gloom about U.S.-China trade war took hold again, but have bounced on generally meaningless news that the U.S. has allowed a 90-day reprieve to customers of Huawei. The reprieve solves a short-term problem but has no impact on the bigger, and more meaningful, trade issue.
Similar to last week, nothing really changed following the negative news on Monday, but market players were anxious for a bounce and they created one.
So far, this bounce isn't quite as vigorous as the V-shaped move last week, although it did help to improve sentiment. The indices gapped up and remained in a trading range most of the day on light volume. Still, the strength did nothing to shift the bigger technical picture that remains murky at best.
This is trading-range action right now with some clear support and resistance levels. Until they are tested, we should be ready to deal with choppy and inconsistent action. To make it even more difficult the news flow is producing movement with some confusion as to what is "good" news and what is "bad" news.
Stay flexible and patient. There is a battle going on between the bulls and bears but it is putting many of us to sleep.
Have a good evening. I'll see you Wednesday.